CAPE TOWN, Oct. 3 (Xinhua) -- Minister of Finance Malusi Gigaba has amended the Money Laundering and Terrorist Financing Control (MLTFC) Regulations and the withdrawal of exemptions as a fresh bid to combat money laundering and the financing of terrorism, the National Treasury said on Tuesday.
These amendments fall in line with the Financial Intelligence Centre Act (FICA), effective on October 2, 2017, the Treasury said.
These amendments to the MLTFC Regulations and the withdrawal of exemptions coincide with the commencement of a number of amendments to the FICA, which the minister had announced on June 13 this year.
"This provides the legal basis for a shift in the measures to protect the integrity of the South African financial system to a risk-based approach, which modernizes the manner institutions undertake customer due diligence and encourages innovation in the way they deal with their customers," the Treasury said.
Under the amended MLTFC and withdrawal of exemptions, financial institutions should determine what constitutes single transactions in the context of their own business, and provide for the application of a single transaction threshold in so far as they accommodate such transactions.
While the withdrawal of exemptions may impact institutions' compliance approach to the customer due diligence requirements of the FICA; nevertheless, institutions may continue to be guided by the content of the withdrawn exemptions in the implementation of their compliance approaches, the Treasury said.
Although a few objections were received on the withdrawal of some exemptions, these were not supported by adequate empirical data; consequently, sufficient information was not provided to retain the exemptions in question, said the Treasury.
Further consultations on new exemptions may be considered in sectors where it can be clearly demonstrated that such exemptions are necessary and will not undermine the objectives of the FICA, according to the Treasury.
The latest move is expected to further strengthen the transparency and integrity of the South African financial system in its objectives to combat financial crimes, which include tax evasion, money laundering and the financing of terrorism and illicit financial flows.
The amendments also make it harder for persons who are involved in illegitimate activities or tax evasion to hide behind legal entities like shell companies and trusts.
