The President of South Africa, Jacob Zuma, signed the amendment of the Financial Intelligence Centre Act that aims at tackling money laundering, tax evasion, and terrorist financing activities. The bill will allow increased scrutiny of the bank accounts of “prominent individuals“, including himself, into law, his office said on Saturday.
Zuma had sent the bill back to parliament in November because he believed that searches conducted without a warrant were unconstitutional. A statement from the president office said that “the president is now satisfied that the Act addresses the constitutional concerns he had raised about warrantless searches.”
The Financial Action Task Force (FATF) gave South Africa a June deadline to comply with its 40 Recommendations or risked being kicked out of the global fraud monitor.
The changes will ensure that it is harder to hide behind shell companies and trusts by identifying ultimate beneficial owners of companies and accounts – including those of “domestic prominent, influential persons.”
Zuma Concern on FATF Recommendation 12
Financial institutions should be required, in relation to foreign politically exposed persons (PEPs) (whether as a customer or beneficial owner), in addition to performing normal customer due diligence measures, to:
- have appropriate risk-management systems to determine whether the customer or the beneficial owner is a politically exposed person;
- obtain senior management approval for establishing (or continuing, for existing customers) such business relationships;
- take reasonable measures to establish the source of wealth and source of funds; and
- conduct enhanced ongoing monitoring of the business relationship.
Financial institutions should be required to take reasonable measures to determine whether a customer or beneficial owner is a domestic PEP or a person who is or has been entrusted with a prominent function by an international organisation. In cases of a higher risk business relationship with such persons, financial institutions should be required to apply the measures referred to in paragraphs (b), (c) and (d).
The requirements for all types of PEP should also apply to family members or close associates of such PEPs.