Challenge of guarding the guardians
With this information banks can determine whether a customer is a domestic prominent influential person and that, in accordance with the risk management and compliance programmes, their prospective business relationship entails higher risk.
The act says the institutions must obtain senior management approval for establishing the business relationship, take reasonable measures to establish the source of wealth and funds and to conduct enhanced ongoing monitoring of the relationship.
If freedom fighters such as Steve Biko and Ahmed Timol were alive today, they would be under the watch of the Financial Action Task Force (FATF), an inter-governmental body established in 1989 to “counter money laundering, terrorist financing and the proliferation of weapons of mass destruction”.
When we objected to some of the clauses in the FIC Amendment Bill, we indicated that we were not oblivious or rather dismissive of attempts by the government to implement international policy recommendations set out by FATF to fight terrorist financing and money laundering.
We argued that the bill would be ineffective by virtue of what had been omitted and would be counter-productive in that it infringes on the privacy of citizens. This has become a reality in customer relationships with banks.
There is no doubt that the FATF regime can be made more effective and to yield huge benefits in economic and general well-being of countries. Research shows that “dealing with corrupt politically exposed persons - most are honest - poses difficult challenges of ‘guarding the guardians’.”
FATF recognises that customer due diligence and knowing your clients must be implemented fairly and effectively by governments, supervisors, law enforcement and financial institutions.
There must also be an assurance that they are not used to further own business interests and political goals, that there is no financial exclusion, racism and discrimination.
Its policy recommendations must be implemented in a transparent and democratic manner and in particular to South Africa, as citizens, we must ensure that there is respect for the Constitution and the Bill of Rights.
FATF must not be used to discriminate instead of ensuring that recommendations are implemented in a transparent and democratic manner and these newly granted powers are used to thwart money laundering and terrorism threats. The definitions must not be broad and vague to allow for purposes such as guarding against “improper” information modification and ensuring “timely” access to information, functions that are not necessarily tied to money laundering and terrorism threats.
Legally enforceable safeguards, including robust transparency, oversight, and regulatory measures must be in place to protect constitutional rights and privacy.
South African citizens are protected against racism and invasion of privacy.
Political parties must therefore commit themselves to hold public hearings to ensure greater participation of South African civil society in the FATF Mutual Evaluation of South Africa. This will at the minimum ensure that constitutional rights are protected while fighting against what it sought to do: money laundering and terrorism financing.
These are the obvious benefits of participating in the FATF process.
Sello Mashao Rasethaba is the chairperson of the African Entrepreneurs Council.