Political party the Economic Freedom Fighters (EFF) says South Africa’s Financial Intelligence Centre (FIC) Amendment Bill is needed to fight crime and illicit flows in the country.
The bill, which was debated in Parliament this week, seeks strengthening regulations that deal with money laundering and illicit financial transactions.
The legislation further seeks bringing South Africa in line with standards set by the global Financial Action Task Force (FATF).
But progress on the bill has stalled as President Jacob Zuma in November last year referred it back to the National Assembly.
After the bill had been on his desk for several months, Zuma expressed concerns over whether the provision for warrantless searches would pass constitutional muster.
However, following public hearings into these concerns over the bill in Parliament this week, the EFF has come out behind the FIC Amendment Bill.
“For a very long time, South Africa has been a playground of financial criminals who are involved in money laundering and many other instances of illicit financial flows without consequences,” the EFF said in a statement.
The EFF believes that although the bill is not all encompassing, it is a “step in the correct direction” and can assist the state in fighting financial crimes.
“FICA Bill is long overdue since its introduction by the former Minister of Finance Nhlanhla Nene in October 2015, and as a country we cannot allow for any further delay.”
The party added: “If politicians and influential people earn their money justly and from non-corrupt activities, they will have no difficulty with legislation that fights corruption and money laundering.”
This refers to the scrutiny of all politicians and their family when using the banking system, which will be possible through the legislation. The bill will also introduce the notion of prominent influential persons, such as local and international people who do business with the state.
The bill requires that banks conduct enhanced due diligence of politically exposed people in addition to current due diligence of all their customers.
Fin24 previously reported that National Treasury and South Africa’s banking authorities have cautioned that the longer the country delays signing the bill into law the more South Africa is at risk of tarnishing its reputation as a regime with sound financial institutions.
In a public hearing on Wednesday, Treasury's Ismail Momoniat explained that not complying with international standards of the FATF will lead to punitive action from the international financing community. This would have the same effect as a ratings downgrade, as it will increase borrowing costs.