The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act has been signed into law. Cascading commencement dates for different sections have been proclaimed.
On 22 December 2022, the President signed the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 (Amendment Act) into law. The commencement was gazetted on 31 December 2022.
The Amendment Act amends five pieces of legislation, namely:
- the Companies Act, 2008 (Companies Act);
- the Financial Intelligence Centre Act, 2001 (FICA);
- the Financial Sector Regulation Act, 2017 (FSR Act);
- the Nonprofit Organisations Act, 1997 (NOA); and
- the Trust Property Control Act, 988 (TPCA).
A detailed analysis of the amendments can be found
here and
here.
The Amendment Act has cascading commencement dates.
The following sections came into effect from 31 December 2022:
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Amendments to the NOA (Sections 9, 10, and 16 of the Amendment Act)
Amendments to the NOA, among other things, allow the Directorate for Non-profit Organisations to collaborate, co-operate, co-ordinate and enter into arrangements with other organs of state.
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Amendments to FICA (Sections 18 to 51 of the Amendment Act)
Amendments to FICA include expanding the objectives and powers of the Financial Intelligence Centre (FIC or the Centre) and technical amendments on Customer Due Diligence (CDD) and Politically-Exposed Persons (PEPs). The amendments extend the instances when administrative sanctions may be imposed for failing to comply with certain sections of FICA. Additionally, amendments relating to the Risk Management and Compliance Programme (RMCP) and targeted financial sanctions have been included.
We highlight a few of the material amendments to FICA effected by the Amendment Act.
Definitions
The
amendments to the definitions in FICA have taken effect, in particular the expanded definition of "beneficial owner".
New powers granted to the FIC
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Section 21: empowers the Centre to enter into public-private partnerships for the purposes of achieving the objectives of the Centre. The FIC’s power extends to being able to request information or access to any database held by any organ of state and access to information in a register that is kept by an organ of state.
Amendments relating to CDD
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Section 22: amends section 21B to expand and clarify the CDD measures for legal persons, trusts and partnerships.
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Section 23: amends section 21C to provide that, if an accountable institution suspects that a transaction or activity is suspicious in terms of section 29 (STR) and reasonably believes that performing the CDD measures in terms of section 21C will disclose to the client that a STR will be made to the FIC, it may discontinue the CDD process and consider filing an STR.
Targeted financial sanctions
FICA is amended to provide for immediate enforcement of the resolutions of the United Nations Security Council upon adoption of a resolution.
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Amendments to the Companies Act (Sections 55 and 59 of the Amendment Act )
Section 55 of the Amendment Act inserts the definitions of "affected company" and "beneficial owner" into the Companies Act.
- An
"affected company" is defined to mean a regulated company as set out in section 117(1)(i)1 and a private company that is controlled by, or is a subsidiary of, a regulated company as a result of any circumstances contemplated in section 2(2)(a) or 3(1)(a).2
- A
"beneficial owner" is defined to mean an individual who, directly or indirectly, ultimately owns a company or exercises effective control of the company. This ownership or control includes the ways set out in the definition (such as holding beneficial interests in securities; exercising voting rights associated with securities; or exercising a right to appoint or remove members of the board of directors).
Section 59 of the Amendment Act amends section 69(8) of the Companies Act to include additional grounds to disqualify an individual from being a director or prescribed officer in a company. In particular, a person who has been convicted and imprisoned without the option or a fine or fined more than the prescribed amount for an offence involving money laundering, terrorist financing or proliferation financing activities (as those terms are defined in FICA) is disqualified from serving as a director or prescribed officer.
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Amendments to the FSR Act (Sections 62 to 65 of the Amendment Act)
The Amendment Act introduces the concept of beneficial owners into the FSR Act by introducing a new Chapter 11A.
The following sections will come into effect on 1 April 2023:
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Amendments to the Companies Act (Sections 56, 57, 58, 60 and 61 of the Amendment Act)
Amendments to the Companies Act provide a mechanism for the Companies and Intellectual Property Commission (CIPC) to keep accurate and updated beneficial ownership information and place obligations on companies to establish and maintain beneficial ownership/beneficial interest records.
We highlight below the material amendments to the Companies Act effected by the Amendment Act.
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Section 56: amends section 33 of the Companies Act to provide that every company (whether it is an affected company or a company that is not an affected company) must file an annual return with the CIPC which includes the following:
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for companies other than affected
companies, a copy of the company's securities register as required in terms of section 50, which must include the prescribed information on all the natural persons who are the beneficial owners of the company; and
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for affected companies, a copy of the company's securities register as well as its register of the disclosure of beneficial interest (discussed below).
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Section 57: amends section 50 of the Companies Act to provide that a company that is
not an affected company must:
- record in its securities register prescribed information about the natural persons who are the beneficial owners of the company, in the prescribed form. It must ensure that this information is updated within the prescribed period after any changes in beneficial ownership have occurred; and
- file a record with the CIPC, in the prescribed form and containing the prescribed information, about the individuals who are the beneficial owners of the company. It must ensure that this information is updated by filing notices with the CIPC within the prescribed period after any changes in beneficial ownership have occurred.
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Section 58: amends section 56 of the Companies Act to provide that an affected company must establish and maintain a register of the persons who hold beneficial interests equal to or in excess of 5% of the total number of securities of that class issued by the company, together with the extent of those beneficial interests. In terms of the amended section, an affected company must also ensure that this register is updated within the prescribed period after the company has received a notice contemplated in section 122(1).
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Section 60: under the amended section 122(1), a person must give an affected company (as opposed to just a regulated company) notice if the person has acquired or disposed of a beneficial interest in securities of the affected company amounting to a whole multiple of 5% of the issued securities of that class. An affected company that has received such a notice must file a record of that notice with the CIPC under the new section 122(3A).
The requirements detailed above will be prescribed after consultation with the Minister of Finance and the FIC. We expect draft regulations prescribing these requirements will be published for public comment early this year.
See our previous
e-Alert for further detail on the amendments to the Companies Act.
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Amendments to the TPCA (Sections 1, 3, 4, 5 and 8 of the Amendment Act)
Amendments to the TPCA address deficiencies in the maintenance and disclosure of beneficial ownership information of trusts.
The Amendment Act introduces a new definition of "beneficial owner", which includes a natural person who directly or indirectly ultimately owns the relevant trust property; a natural person who exercises effective control of the administration of the trust; each founder of the trust; each trustee; and each beneficiary of the trust.
The Amendment Act also introduces a new section, section 11A, dealing with beneficial ownership, which obliges a trustee to:
- establish and record the beneficial ownership of the trust;
- keep a record of the prescribed information relating to the beneficial owners of the trust;
- lodge a register of the prescribed information relating to the beneficial owners of the trust with the Master's Office; and
- ensure that the prescribed information is kept up to date
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Amendments to the NOA (Sections 11 to 15 and 17 Amendment Act)
Material amendments to the NOA relating to the following:
- Non-profit organisations that make donations to individuals or organisations outside South Africa's borders; or provide humanitarian, charitable, religious, educational or cultural services outside South Africa's borders are required to register under the NOA;
- other non-profit organisations that are not organs of state may apply to the Director of Non-profit Organisations for registration;
- non-profit organisations that are registered or required to register under the NOA must comply with its requirements; and
- the failure to register, if required to do so, or the failure to comply with the requirements of the NOA relating to registration or providing prescribed information about the registered non-profit organisation's office-bearers, control structure, governance, management or administration may attract administrative sanctions.
The following specific provisions will come into effect on a date to be determined:
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Amendments to the TPCA (Sections 2 and 6 of the Amendment Act)
- Section 2 of the Amendment Act will take effect from 1 April 2023, except subsection (1H) of section 6 of the TPCA. This provision relates to the Master’s obligation to establish and maintain in the prescribed manner a public register of people who are disqualified from serving as a trustee.
- Section 6 of the Amendment Act will take effect from 1 April 2023, except section 11A(1)(c), (2) and (3) of the TPCA. These provisions relate to:
- obligations on a trustee to lodge with the Master's Office a register of prescribed information on the beneficial owners of the trust;
- obligations on the Master to keep a register in the prescribed form containing the prescribed information about the beneficial ownership of trusts; and
- obligations to make the prescribed information about beneficial ownership of trusts available to prescribed persons.
Draft regulations relating to, among other things, the required prescribed information about the beneficial ownership of a trust; recording details of accountable institutions used by a trustee to perform the trustee's functions relating to trust property; the prescribed persons to whom access to beneficial ownership registers may be given; and details of the register of persons disqualified from serving as trustees have been published for public comment. Comments must be submitted before 13 February 2023. A copy of the draft regulations can be accessed
here.
Section 7 of the Amendment Act
It appears that section 7 of the Amendment Act, dealing with, among other things, the consequences of failure to comply with the obligations in section 11A(1) of the TPCA (beneficial ownership) has not been ascribed a commencement date.
Commencement of amendments to Schedules 1, 2 and 3 of the Financial Intelligence Centre Act, 2001
On 29 November 2022, the Minister of Finance published Government Gazette 47596 which amends schedules 1, 2 and 3 of FICA (Amended Schedules). The Amended Schedules took effect from 19 December 2022.
The Amended Schedules amend the list of entities that are deemed to be accountable institutions, supervisory bodies, and reporting institutions under FICA.
The new entities now included in Schedule 1 and deemed to be accountable institutions are:
- a co-operative bank;
- a person who carries on the business of a credit provider;
- a person who carries on the business of a money or value transfer provider;
- a person who carries on the business of dealing in high-value goods in respect of any transaction where that business receives payment in any form to the value of ZAR100 000 or more, whether the payment is made in a single operation or in more than one operation that appears to be linked, where “high-value goods” means any item that is valued in that business at ZAR100 000 or more;
- The South African Mint Company (RF) (Pty) Ltd, only to the extent that it distributes non-circulation coins in retail trade for which it receives payment in any form to the value of ZAR100 000 or more, whether the payment is made in a single operation or in more than one linked operation;
- a person who carries on the business of one or more of the following activities or operations for or on behalf of a client:
- exchanging a crypto asset for a fiat currency or vice versa;
- exchanging one form of crypto asset for another;
- conducting a transaction that transfers a crypto asset from one crypto asset address or account to another;
- safekeeping or administration of a crypto asset or an instrument enabling control over a crypto asset; and
- participating in and providing financial services related to an issuer’s offer or sale of a crypto asset,
where “crypto asset” means a digital representation of perceived value that can be traded or transferred electronically within a community of users of the internet who consider it as a medium of exchange, unit of account or store of value and use it for payment or investment purposes. It does not include a digital representation of a fiat currency or a security as defined in the Financial Markets Act, 2012; and
- a clearing system participant that facilitates or enables the origination or receipt of any electronic funds transfer and/or acts as an intermediary in receiving or transmitting the electronic funds transfer.
This summary is not intended to, and does not, constitute legal advice, and may not be relied upon. For further information or tailored advice, please contact your usual Webber Wentzel contact.
