Definitions
The Omnibus Bill amends several definitions in the Financial Intelligence Centre Act, 2001 (FICA) and introduces other definitions.
Beneficial owner
The Omnibus Bill expands on the concept of beneficial owner, which is amended to mean a natural person who directly or indirectly:
- ultimately owns or exercises effective control of:
- a client of an accountable institution; or
- a legal person, partnership or trust* that owns or exercises effective control of, as the case may be, a client of an accountable institution; or
- exercises control of a client of an accountable institution on whose behalf a transaction is being conducted; and
includes the natural persons contemplated in section 21B of FICA.
The natural persons contemplated in section 21B of FICA are linked to legal persons, partnerships, and trusts for purposes of FICA and include broad groups of natural persons.
As regards legal persons, section 21B(2)(a) of FICA, as amended by the Omnibus Bill, provides that these natural persons are:
- each natural person who, independently or together with another person, has a controlling ownership interest in the legal person;
- if in doubt, each natural person who exercises control of that legal person through other means, including through the natural person's ownership or control of other legal persons, partnerships or trusts; or
- each natural person who exercises control over the management of the legal person, including in the natural person's capacity as executive officer, non-executive director, independent non-executive director, director or manager.
As regards partnerships, section 21B(3)(b) of FICA, as amended by the Omnibus Bill, provides that these natural persons are:
- every partner, including every member of a partnership
en commandite, an anonymous partnership or any similar partnership;
- if a partner is not a natural person, the beneficial owner of that legal person, partnership or trust;
- the natural person who exercises executive control over the partnership; and
- each natural person who purports to be authorised to enter into a single transaction or establish a business relationship with the accountable institution on behalf of the partnership.
As regards trusts, section 21B(4)(c), (d) and (e) of FICA, as amended by the Omnibus Bill, provides that these natural persons are:
- each founder;
- if a founder of the trust is not a natural person, the beneficial owner of the legal person or partnership;
- each trustee;
- if a trustee is not a natural person, the beneficial owner of the legal person or partnership;
- each natural person who purports to be authorised to enter into a single transaction or establish a business relationship with the accountable institution on behalf of the trust, whether such a person is appointed as a trustee of the trust or not;
- each beneficiary of the trust;
- if a beneficiary is not a natural person, the beneficial owner of that legal person, partnership or trust; and
- if beneficiaries are not referred to by name in the trust deed or other founding instrument, the particulars of how the beneficiaries of the trust are determined.
(*For purposes of FICA, "trust" means a trust defined in section 1 of the Trust Property Control Act, 1988, other than a trust established:
- by virtue of a testamentary disposition;
- by virtue of a court order;
- in respect of persons under curatorship; or
- by the trustees of a retirement fund in respect of benefits payable to the beneficiaries of that retirement fund,
and includes a similar arrangement established outside South Africa.)
Politically exposed persons
The Omnibus Bill cleans up the terminology for politically exposed persons. The term "domestic prominent influential person" will be amended to "domestic politically exposed person". The term "foreign prominent public official" will be amended to "foreign politically exposed person".
Proliferation financing
The Omnibus Bill introduces a definition for "proliferation financing" or "proliferation financing activity". The two terms are defined to mean an activity which has or is likely to have the effect of providing property, a financial or other service or economic support to a non-State actor, that may be used to finance the manufacture, acquisition, possessing, development, transport, transfer or use of nuclear, chemical, or biological weapons and their means of delivery.
Powers and scope of the Financial Intelligence Centre
The Omnibus Bill expands the scope of the Financial Intelligence Centre (FIC). The FIC's scope is expanded to include the identification of persons involved in money laundering activities, offences relating to the financing of terrorist and related activities and proliferation financing activities. The FIC's powers are expanded to allow the FIC to administer measures requiring persons to freeze property and transactions pursuant to financial sanctions that may arise from resolutions adopted by the Security Council of the United Nations. The FIC is also empowered to produce forensic evidence, based on the application of specialised scientific methods and techniques, pertaining to the flow of financial transactions and the links between persons, and between persons and property, based on the flow of financial transactions.
FICA is amended to include the Auditor-General as one of the entities the FIC is required to inform, advise, and co-operate with. The FIC is further empowered to enter into public private partnerships for the purposes of achieving any of the objectives of the FIC set out in section 3 of FICA.
Customer due diligence obligations
The Omnibus Bill clarifies that in conducting a customer due diligence, there is a level of clarity an accountable institution should acquire in establishing the identity of a client where the client is a legal person, partnership, or trust, which may include establishing the beneficial ownership of such a client.
Suspicious or unusual transaction reporting
The Omnibus Bill amends section 21C of FICA to clarify that where an accountable institution reasonably believes that performing the customer due diligence requirements will disclose to the client that a section 29 report will be made, it may discontinue the customer due diligence process and consider making a report under section 29.
The amendments make a failure to report the prescribed information in respect of an unusual and suspicious transaction within the prescribed period an act of non-compliance, which is subject to an administrative sanction. An accountable institution, reporting institution or any other person that reasonably ought to have known or suspected that any of the facts that form the basis of a suspicious and unusual transaction as set out in section 29 of FICA exists, and that negligently fails to report the prescribed information in respect of a suspicious or unusual transaction or series of transactions or enquiry, is non-compliant and is subject to an administrative sanction.
Resolutions adopted by the United Nations Security Council
The Omnibus Bill amends FICA by removing the requirement for the Minister of Finance to publish the adoption of resolutions imposing financial sanctions on individuals or entities by the Security Council of the United Nations. Adopted financial sanction resolutions will automatically apply in South Africa in terms of the amended provisions of FICA. A resolution will cease to be in effect upon a decision of the Security Council of the United Nations to no longer apply that resolution.
Personal information
The Minister of Finance may prescribe requirements for the protection of personal information to facilitate the sharing of information between accountable institutions when acting on behalf of the FIC, and when the sharing is necessary to achieve the purposes of FICA.
Risk management and compliance programmes
The Omnibus Bill makes provision for the introduction of group wide risk management compliance programmes for accountable institutions that form part for the same group.
Non-compliance and administrative sanctions
The Omnibus Bill amends FICA to deem certain activities as being acts of non-compliance and subject to administrative sanctions.
The activities include:
- failure to comply with a request made by the FIC or a supervisory body;
- failure to comply with an order made by a judge in terms of section 35 of FICA; and
- where an accountable institution, reporting institution or any other person conducts, or causes to be conducted, two or more transactions with the purpose, in whole or in part, of avoiding giving rise to a reporting duty under FICA.
Prominent influential person
Schedule 3C is amended to provide that a prominent influential person is a person who holds, or has held at any time in the preceding 12 months, the position of:
- chairperson of a board of directors;
- chairperson of an audit committee;
- executive officer; or
- chief financial officer,
of a company defined in the Companies Act, 2008, if the company provides goods or services to an organ of state and the annual transactional value of the goods or services or both exceeds an amount determined by the Minister of Finance by notice in the
Government Gazette.
This summary is not intended to, and does not, constitute legal advice, and may not be relied upon. For further information or tailored advice, please contact Lerato Lamola-Oguntoye or your usual Webber Wentzel contact.
You can also access the Omnibus Bill's proposed amendments to the other pieces of legislation
here.
