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Beneficial Ownership Register following South Africa’s greylisting

The Financial Action Task Force (FATF) placed South Africa on its list of counties with strategic anti-money laundering and countering the financing of terrorism activities (AML/CFT), deficiencies. Countries placed on this list, (grey-listed), is subject to increased monitoring, while working actively with the FATF to address the identified deficiencies.

FATF noted in its statement of 24 February 2023, the following: -“When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring.”

The South African Government, as part of its action plan to address the deficiencies identified by the FATF, even before the “grey listing” of South Africa, assented to the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 22 of 2022 (“GLAA”) on 29 December 2022. The GLAA amends the regulation of Beneficial Ownership, amongst others, in terms of the Companies Act, 71 of 2008, the Trust Property Control Act 57 of 1988, and the Financial Sector Regulation Act, 9 of 2017.

The amendments to the Companies Act, specifically, seeks to establish an accurate, up to date Beneficial Ownership Register, developed by the CIPC, as Regulator of Companies and Intellectual Property Rights. Corporate vehicles, such as companies tend to be used for nefarious activities, including money laundering. As part of the inter-departmental committee on beneficial ownership transparency (IDC-BOT), the CIPC is committed to aid in the filing of beneficial ownership information by companies and close corporations, and more importantly, providing access to accurate, up to date, BO-information to law enforcement agencies and vetted regulatory bodies.

On 1 April 2023, the CIPC rolled out its Beneficial Ownership Register, allowing for applicable entities to submit its beneficial ownership information via a fully automated, easy to navigate, filing platform. Failure to submit the required information is tantamount to non-compliance of the Companies Act, which could result in a court ordered administrative fine. The data accumulated through the Register will provide a significant starting point for law enforcement agencies in their fight against financial crimes and corruption within the South African borders, but also globally.

It is heartening to note that since the system’s release, 10 entities have submitted its beneficial ownership information, via the dedicated BO system. An indication that corporate South Africa is committed to greater transparency and economic growth.

South Africa is expected to address the deficiencies highlighted in the mutual evaluation report (MER) by no later than January 2025. However, government hopes to address most of the 8 areas where deficiencies have been recorded, much sooner.

With the publication of the draft Regulations on the Companies Act Amendment, for public comment coming to an end on 29 March 2023, the publication and promulgation of the final Regulations is imminent.

If South Africa moves speedily in its efforts to combat financial crimes, the impact of “grey listing” on the ease of doing business with South Africa, will be limited.

In light of the amendments to various legislation by the GLAA, it is crucial for all relevant individuals to familiarize themselves with the content thereof and to ensure proper reporting of the required information. Once South Africa has demonstrated its resolve to combat financial crimes and corruption, through swift compliance with the new regulations the removal of SA from the FATF’s grey list sooner rather than later, is attainable.

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