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Financial Intelligence Centre Amendment Bill Synopsis

This document provides a summary of the Financial Intelligence Centre Amendment Bill and the views of the Centre on its implementation. It covers definitions, conflict with other laws, objectives and functions of the Centre, counter-money laundering advisory council, access to records, conveyance of cash, intervention by the Centre, disclosure of information, and directives.

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Financial Intelligence Centre Amendment Bill Synopsis

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  1. 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

  2. financial intelligence centre 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)

  3. financial intelligence centre 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.

  4. financial intelligence centre 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

  5. financial intelligence centre 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

  6. financial intelligence centre 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

  7. financial intelligence centre 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

  8. financial intelligence centre 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

  9. financial intelligence centre 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

  10. financial intelligence centre 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

  11. financial intelligence centre 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

  12. financial intelligence centre 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

  13. financial intelligence centre 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

  14. financial intelligence centre 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

  15. financial intelligence centre 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

  16. financial intelligence centre 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

  17. financial intelligence centre 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

  18. financial intelligence centre 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

  19. financial intelligence centre 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

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

  27. 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

  28. 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

  29. 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

  30. financial intelligence centre REPUBLIC OF SOUTH AFRICA END CONTACT DETAILS

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