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Repercussions of a bill that combats financial crime in South Africa
During the past week many citizens of South Africa found themselves hooked on a live broadcasting of debates between Parliament’s Committee on Finance and parties for and against a bill that is supposed to combat financial crime.
This bill, named the Financial Intelligence Centre (FIC) Amendment Bill, was passed by Parliament in May 2016 and expected to be signed into law by President Zuma before end June 2016. The bill is supposed to combat crimes like money laundering, tax evasion, financing of terrorism, and the illegal outflow of money, in line with international standards set by The Financial Action Task Force.
But now, after a delay of SIX MONTHS, it is back in Parliament, unsigned.
I have given consideration to the Bill in its entirety and certain submissions regarding the constitutionality of the Bill. After consideration of the Bill and having applied my mind to it, I am of the view that certain provisions of the Bill do not pass constitutional muster.
"In terms of section 79 (1) of the Constitution I have therefore referred the Bill to the National Assembly for reconsideration for the reasons set out to the Speaker of the National Assembly.— President Jacob Zuma
President Jacob Zuma
The new FIC Amendment Bill gives unconstitutional rights to Banks
Indeed, the new amendment bill exempts banks from the obligation to obtain a warrant before intruding on the privacy of an individual or institution. Another unjust clause stipulates that a senior bank official has to approve and constantly monitor the accounts of prominent influential persons, which includes Government officials from the president down to municipal managers. (The question is: Why did Parliament pass a bill like this?)
During the debates it became clear that this was not only a battle between Just and Unjust, or between Constitutional and Unconstitutional, but between Pro-Guptas and Anti-Guptas. (Refresh your memory of the Gupta Family, and SA’s Public Protector’s controversial report about this family’s grip on SA’s president, some ministers and CEO’s of parastatals). All of this is still hanging in the air, unresolved!
The Black Business Council and the Progressive Professionals Forum (Pro-Guptas) accused Parliament of ’Majoritarianism’ - a political agenda that allows a specific majority to make decisions that affect the society - while under a democratic majoritarian political structure, which SA is supposed to be, the majority would not exclude any minority. They threatened to prosecute President Zuma if he signs the bill into law.
G7 (The Group of Seven)
The Group of Seven (G7) is a group consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States - the seven major advanced economies as reported by the International Monetary Fund. The G7 countries represent more than 64% of the net global wealth ($263 trillion). The European Union is also represented within the G7.
South Africa does have legislation in place to combat financial crime such as money laundering, terrorist financing activities, tax evasion, etc.
The Financial Intelligence Centre Act (38 of 2001), also known as the FIC Act, came into effect on July 1st, 2003, which made the country the first in Africa to become a member of the inter-governmental Financial Action Task Force (FATF) that was established in 1989 during a G7 summit meeting.
South Africa has a well-structured Financial Intelligent Centre (FIC), with accountable institutions such as banks and many other businesses/institutions who are dealing with people, organisations, and their money. These bodies are obliged by law to identify and verify their clients, to keep records of their client’s identities and of all transactions entered into by them, and to submit reports to the FIC, who are obliged by law to report any discrepancies and possible illegalities to the local and international investigating authorities and supervising bodies who have, on their turn, more rights that will eventually bring the culprits to trial in a court of law.
However, the alleged capturing of South Africa by foreign businessmen since about 2008 has made amendments to the original bill a matter of urgency.
What is Money Laundering?
Money laundering is the process used by criminals to hide, conceal or disguise the nature, source, location, disposition or movement of unlawful activities or any interest which anyone has in such proceeds.
What is White-Collar Crime?
White-collar crime refers to financially motivated nonviolent crime committed by business and government professionals. Typical white-collar crimes include fraud, bribery, Ponzi schemes, insider trading, labor racketeering, embezzlement, cybercrime, copyright infringement, money laundering, identity theft and forgery.
A Money Laundering Offence has three core elements:
The act of money laundering, the presence (benefit) of proceeds of crime, and the knowledge of the fact that a money laundering transaction is happening or has taken place.
Opinion of an owfma-sa
The new FIC-bill not only transfers some of the rights of the FIC to banks in order to streamline the control of financial crime; it seems to be a thorough grip on all who happen to earn a significant amount of money. The new bill gives banks the right to clarify and verify each and every source of income, expense and investment.
However, South Africa is a democracy with a Constitution that established human rights that have to be considered on every level of society, from Parliament to Prisons.
Somehow I have missed the bill’s passing in Parliament – of course, this owfma-sa has more important things to do than checking the doings of Parliament, and therefore I rely on the media to rub interesting trends of events under my nose.
And so, the back-and-forth debating about this new bill during the past week mesmerized me.
Everybody - pro-Guptas as well as anti-Guptas - has a justifiable point, and this may send the bill down the drain, putting South Africa on a United Nations watch-list. The day might even come when the Guptas will sue each and everyone who has used their name in a negative way, says my Crystal ball!)
While the entire FIC-Act can be seen as an intrusion in people’s and organizations’ private affairs without a warrant, the new bill shamelessly authorizes banks to do warrant-less research. Some clauses in the amendment bill obviously need to be reviewed and reworded. But this was only suggested by Treasury, while the pro-Guptas suggested the bill should be scrapped, and the anti-Guptas suggested that it should be sent as it is back to President Zuma who has the right to use tax payer’s money to challenge it in the Constitutional Court.
According to the Portfolio Committee chair, Yunus Carrim, whatever the committee decides, someone is going to take this bill to the Constitutional Court.
The Committee’s final decision is still to be made.
Justice will reign, says this owfma-sa in my capacity as ordinary white female middle-aged South African.
In the meanwhile another issue about money that was stolen by the previous Apartheid Government is busy developing into a crisis, but this is a story for another week.