Scrapping the FIC bill an open invitation to junk status rating?

Brushing aside top legal reassurances that the new Financial Intelligence Bill (bringing South Africa into line with wide-ranging international financial security norms), is constitutional, the Black Business Council and Progressive Professionals Forum, want it scrapped. Two terms; ‘politically exposed persons’ and ‘prominent influential persons,’ trouble them, plus they fear that honest, hard-working black bank customers will be needlessly targeted. The former concern is probably where the nub of this matter lies, given the Gupta’s wily, shady machinations which epitomise the State Capture syndrome that has benefitted numerous powerful, politically-connected (yes, mainly black) business people. The latter however deserves further ventilation. The law is often a very blunt instrument; our recent history being full of examples where innocents become collateral victims of wide-ranging provisions aimed at flushing out the true crooks – or being deliberated abused. However, scrapping the entire bill, which no less than Advocate Jeremy Gauntlett, who built a career on his virtually unparalleled knowledge of the Constitution, says will fly, signals to the world that we’re a basket case of uncurbed corruption, worthy of financial junk status. By all means, interrogate the provisions of the bill and build in safeguards, but throwing the baby out with the bathwater, while waving the racism flag, is short term financial suicide. If the bill is scrapped, any short-term gain for the greedy and corrupt will soon be lost, with the entire country being relegated to the scrapheap of international scorn. National Treasury, no less, is of a similar view. In this timely piece below, the FIC bill is unpacked so that we can better know just what the scrap is about. – Chris Bateman

By Liesl Peyper

Cape Town – The Financial Intelligence Centre (FIC) Amendment Bill has been the subject of considerable controversy in the past few months.

Since it landed on President Jacob Zuma’s desk, stakeholders have argued that its ratification is urgent, while others have warned about its Constitutional pitfalls.

President Jacob Zuma answers questions at Parliament in Cape Town, March 17, 2016. REUTERS/Mike Hutchings

But what is exactly is the FIC Bill?

The piece of legislation seeks to strengthen regulations that deal with money laundering and illicit financial transactions by bringing South Africa into line with standards set by the global Financial Action Task Force (FATF).

South Africa is a member of the FATF which is a policy-making body that works together with financial institutions worldwide to bring about reforms to counter unlawful financial operations.

As a member of FATF, South Africa would be expected to align its own financial legislation with FATF’s objections, which is what government is attempting to do through the FIC Bill.

Read also: New war brews within ANC as MP openly defies #Zupta over FIC Bill

The FIC Bill will therefore enable South Africa to counter money laundering, the international finance of terror and illicit cross-border flows of money.

The legislation also requires that banks conduct enhanced due diligence of politically exposed people in addition to current due diligence of all their customers.

In addition, the Bill introduces the notion of not just politically exposed persons but prominent influential persons, which includes those local and international people who do business with the state.

The legislation will lead to the scrutiny of all politicians and their family when using the banking system.

Detractors of the new legislation argue that South Africa is going beyond what is required in terms of the FATF regulations thereby undermining individuals’ constitutional rights to privacy and dignity.

But National Treasury and South Africa’s banking authorities have cautioned on several occasions that the longer the country delays signing the Bill into law the more South Africa is at risk of tarnishing its reputation as a regime with sound financial institutions. – Fin24


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