financial intelligence centre REPUBLIC OF SOUTH AFRICA Synopsis of Financial Intelligence Centre Amendment Bill and Centre’s views on implementation 6 MAY 2008 Tel: (012) 309 9200 Fax: (012) 309 9483 www.fic.gov.za

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 1 – Definitions Amends definitions and introduces new definitions as consequence of other amendments effected by the Bill New concept of bearer negotiable instrument introduced in accordance with international standards which require measures to detect physical cross-border transportation of currency and bearer negotiable instruments (Special Recommendation IX of the FATF)

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 2 – Application of the Act when in conflict with other laws Interpretational aid in case of conflict between principal Act and any other law, other than the Constitution – provisions of the principal Act will prevail. This applies only with regard to matters that are dealt with in the principal Act.

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clauses 3 and 4 – Centre’s Objectives and Functions Extends objectives and functions of the Centre in relation to supervision and enforcement of compliance with the provisions of the principal Act provision of information collected by the Centre to supervisory bodies Makes it clear that functions concerning supervision and enforcement of compliance with the provisions of the principal Act are to be performed in relation to institutions that are not regulated or supervised or where supervisory bodies do not supervise or enforce compliance with these provisions

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clauses 5 and 6 – Counter-Money Laundering Advisory Council Change of name to the Money Laundering Advisory Council – Counter-Money Laundering Advisory Council

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 7 – Centre’s access to records Amends section 26 of the principal Act to distinguish the proceeding in terms of this section relating to reports made in terms of section from the new inspection proceedings provided for in the Bill

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clauses 8 and 24 – Conveyance of cash to or from the Republic Amends section 30 of the principal Act to include the reporting on the conveyance of bearer negotiable instruments in the requirement to report the conveyance of cash in excess of a prescribed threshold to or from the Republic This will bring this provision in line with the current FATF Recommendations Amends section 70 of the principal Act consequentially to add the words “or bearer negotiable instruments” wherever the word “cash” occurs

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 9 – Intervention by the Centre Effects a technical amendment to section 34 of the principal Act by updating a reference to repealed legislation

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 10 and 11 – Disclosure of information Amends sections 36 and 40 respectively to improve the provisions concerning the sharing of compliance related information among the Centre, supervisory bodies and law enforcement agencies

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 12 – Directives (Section 43A) Introduces a new provision that will enable the Centre and supervisory bodies to issue directives Directives may deal with application of the principal Act by accountable institutions or categories of accountable institutions Directives may require specific accountable institutions or categories of accountable institutions to: provide information, reports or statistical returns cease any conduct in contravention of the principal Act perform acts necessary to remedy non-compliance with the principal Act perform acts necessary to meet any obligation imposed by the principal Act

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 12 – Registration by accountable institutions and reporting institutions (Section 43B) Introduces a new provision that will require every accountable institution and every reporting institution to register with the Centre This will enable the Centre to obtain improved information of the number of institutions that fall within the ambit of the principal Act and details about those institutions such as the type of business being conducted and the physical address The registration process does not amount to a licensing provision and accordingly it will not present any bar to an institution from carrying on the business of an accountable institution or reporting institution

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 13 – Responsibility for supervision of accountable institutions Amends section 45 of the principal Act in a number of respects: Expressly adds the responsibility to supervise compliance with the principal Act to the functions of all supervisory bodies Provides supervisory bodies with a range of powers, in addition to existing powers they may have in terms of other legislation: to conduct inspections in relation to compliance with the principal Act to impose conditions to qualify for licenses etc. to take a person’s involvement in money laundering or terrorist related activities into account in respect of “fit and proper” tests

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 14 – Inspections (Sections 45A and 45B) Introduces new provisions to enable the Centre and supervisory bodies to appoint inspectors and to conduct inspections in respect of compliance with the provisions of the principal Act Introduces powers that may be exercised during an inspection e.g: directing a person to appear for questioning entering and inspecting the premises where an institution or person conducts business using a computer system on the premises to access records

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 14 – Administrative sanctions(Section 45C) Introduces a range of administrative penalties that may be applied in relation failures to comply with the principal Act Include one or a combination of the following: a caution not to repeat a particular conduct a reprimand a directive to take a remedial or particular action or make any arrangements or cease a particular action restriction or suspension of certain specified business activities a monetary penalty not exceeding R10 000 000 in respect of natural persons and R50 000 000 in respect of legal persons

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 14 – Appeal (Sections 45D and 45E) Provides for an appeal process including the establishment of a Board of Appeal to consider the actions taken by the Centre and supervisory bodies Board consists of as many persons as the Minister of Finance considers necessary, with the chairperson being an advocate or attorney with at least ten years experience Centre is charged with the provision of administrative support to the Board

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 14 – Application to Court (Section 45F) Empowers Centre and supervisory bodies to institute proceedings in the High Court compelling an accountable institution to comply with any provision of the principal Act or to cease contravening a provision of the Act apply to a court for an order restraining an accountable institution from continuing business pending an application to court

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clauses 15 to 23 – Offences Create new offences and amend existing offence provisions of the principal Act to provide for contraventions of new provisions and for offences that have been omitted previously

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 25 – Amendment of Index Effects a consequential amendment to the Index of the principal Act

SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL REPUBLIC OF SOUTH AFRICA SYNOPSIS OF THE FINANCIAL INTELLIGENCE CENTRE AMENDMENT BILL Clause 26 – Amendment of Long Title Effects consequential amendments to the Long Title of the principal Act

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS INSPECTORATE Types of inspections: Routine inspections / compliance examinations Thematic inspections Inspections in respect of specific concerns Routine and thematic inspections to be undertaken in terms of inspection plans to be developed by Inspectorate Inspection manuals to be developed for different types of inspections

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS INSPECTORATE Preparation includes: inspection manuals budgeting recruitment training Systems to identify sectors and institutions for inspection plans Interaction with supervisory bodies

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS INSPECTORATE Inspectorate section within Centre’s structure Start with small number of inspectors (± 3 inspectors) and increase capacity incrementally over five years Initially draw on part-time availability of existing staff

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS INSPECTORATE Envisaged timeframes Process development (including inspection manuals etc.) currently underway Enhancing capacity of existing staff currently underway Budgeting currently underway Recruitment starting May 2009 Training starting June 2009 Ready to commence with inspections from August 2009

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS ADMINISTRATIVE SANCTIONS Internal decision making processes Capacity for vetting of inspection process, review relevant information and advise on appropriate action Processes to support actions of supervisory bodies Guidelines and training on effective use of sanctions Processes for monitoring effect of sanctions

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS ADMINISTRATIVE SANCTIONS Envisaged timeframes Process development currently underway Enhancing capacity of existing staff currently underway Training starting May 2009 Ready to commence from August 2009

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS APPEAL BOARD Infrastructure for Board and secretariat Budgeting Identify candidates for Board

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS APPEAL BOARD Process appointments for Minister Internal structure for secretariat Recruit staff for secretariat

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS APPEAL BOARD Envisaged timeframes Process development currently underway Infrastructure planning currently underway Budgeting currently underway Recruitment for secretariat starting May 2009 Training for secretariat starting June 2009 Identify and appoint members starting May 2009 Ready to commence from August 2009

IMPLEMENTATION OF FIC ACT AMENDMENTS financial intelligence centre REPUBLIC OF SOUTH AFRICA IMPLEMENTATION OF FIC ACT AMENDMENTS OTHER PROCESSES Schedule of supervisory bodies Update references Remove inappropriate bodies Include new/additional bodies Co-ordination / demarcation between supervisors MOUs / other formal arrangements Interaction with other authorities Networks / gateways for sharing of information

FINANCIAL INTELLIGENCE CENTRE REPUBLIC OF SOUTH AFRICA END CONTACT DETAILS NATIONAL TREASURY Nkosana Mashiya Chief Director: Economic Policy and International Financial Relations nkosana.mashiya@treasury.gov.za Tel: (012) 315 5825 Jo-Ann Ferreira Chief Director: Public Entities Governance Unit Jo-Ann.Ferreira@treasury.gov.za Tel: (012) 315 5263 Raadhika Sookoo Director: Economic Policy and International Financial Relations raadhika.sookoo@treasury.gov.za Tel: (012) 315 5671 FINANCIAL INTELLIGENCE CENTRE Murray Michell Director: Financial Intelligence Centre murray.michell@fic.gov.za Tel: (012) 309 9210 Pieter Smit Senior Manager: Legal and Policy pieter.smit@fic.gov.za Tel: (012) 309 9215 Poovindree Naidoo Senior Legal and Policy Advisor poovindree.naidoo@fic.gov.za Tel: (012) 309 9423