SA ‘on track’ to satisfy task force
• Treasury expects financial regulations will meet international requirements, which will safeguard local banks’ offshore relationships
SA’s system of financial regulation is expected to meet the expectations of the Financial Action Task Force when the organisation meets in October, says Treasury deputy directorgeneral Ismail Momoniat. This will mean SA will be out of danger of being placed on the task force’s watch list.
SA’s system of financial regulation is expected to meet the expectations of the Financial Action Task Force when the organisation meets in October, says Treasury deputy directorgeneral Ismail Momoniat.
This will mean that SA will be out of danger of being placed on the watch list of the task force. Being placed on the watch list would jeopardise the relationships local banks have with foreign counterparts. Such relationships are vital to effect payment for imports and exports. The intergovernmental Financial Action Task Force works to combat money laundering and the financing of terrorism.
A number of key regulations under the Financial Intelligence Centre Amendment Act (Fica) will have to be promulgated before the October meeting.
“Everything is on track,” Momoniat said. “Almost all of the regulations will be in place by next year. We are very confident that we will be able to satisfy the Financial Action Task Force.
“We have to get the regulations finalised before October 2 in accordance [with] the timeline we have published. It is also partly driven by the fact that the meeting is in October and by then, crucial clauses that were delayed need to have taken effect,” he said.
SA will have to provide the task force with a progress report on the implementation of the amendment act. The amendment act tackles deficiencies in the system of financial regulation that were identified in a Financial Action Task Force evaluation report, in particular with regard to customer due diligence, record-keeping and beneficial ownership. Many of the banks are implementing some of these prescripts.
Pressure brought to bear by the task force hastened the promulgation of the amendment act, which provides for a riskbased approach to supervision and heightened vigilance by financial institutions, particularly of politically exposed persons.
Politically exposed persons include state officials and private sector individuals.
President Jacob Zuma signed the bill into law on April 26.
Certain sections of the act took immediate effect on June 13 when a notice was promulgated in the Government Gazette.
Other sections will take effect on a later date to be determined by Finance Minister Malusi Gigaba, with most of the remainder likely to take effect on October 2. Dates for the remaining sections relate to the UN Security Council resolution on financial sanctions that are expected to come into operation later in 2017.
Momoniat said the Treasury was working through public comment received on the draft regulations and that a second draft incorporating these comments could be published for public comment later.
Regulations regarding politically exposed persons will take effect in October, but those related to companies that do business with the state will come into force only once the Treasury has published a list of such firms and the relevant thresholds, probably by April.
PRESSURE BROUGHT TO BEAR BY THE TASK FORCE HASTENED PROMULGATION OF THE AMENDMENT ACT