THE Treasury is proposing that banks and
other accountable institutions exercise greater scrutiny over what a
bill before Parliament describes as "prominent influential persons".
Greater vigilance is required over such individuals as they are regarded as being more "vulnerable" to bribery, corruption and money laundering. The definition proposed in the Financial Intelligence Centre Amendment Bill is broader than the "politically exposed persons" used internationally, which refers to those who hold public office.
The Treasury’s
chief director for financial investments and savings, Olano Makhubela,
said in an interview on Wednesday, on the sidelines of public hearings
by Parliament’s finance committee, that a broader definition had been
proposed to give recognition to the fact that public figures had
counterparts in the private sector who also required greater scrutiny.
Prominent influential persons would include top government officials
from the country’s president all the way down to municipal managers, as
well as company chairpersons, CEOs and chief financial officers.
The definition also includes the immediate family, partners and close associates of such individuals. The bill will require that senior bank officials exercise enhanced oversight of the accounts of these people and that their accounts be monitored on an ongoing basis. But banks have objected, saying the definition is too broad and the proposals impractical.
Banking Association SA MD Cas Coovadia said in an interview that banks were willing to ensure that they were not complicit in illegal activities by exercising greater scrutiny over such individuals, but this would be challenging in the absence of a database to identify the individuals concerned.
"The inclusion of close associates and family members presents additional challenges because this potentially has very wide scope," Mr Coovadia said. Would politically influential individuals include leaders of small political parties and their family members?
The Association for Savings and Investments SA also believed it would be difficult, if not impossible, to obtain the required information about these individuals and their families. "Until there is a reliable data source, accountable institutions should be able to rely on self-certification by clients," it said.
Another cause for concern is the bill’s requirement that accounting institutions identify and verify the ultimate beneficial owner of legal entities, trusts and partnerships.
Greater vigilance is required over such individuals as they are regarded as being more "vulnerable" to bribery, corruption and money laundering. The definition proposed in the Financial Intelligence Centre Amendment Bill is broader than the "politically exposed persons" used internationally, which refers to those who hold public office.
The definition also includes the immediate family, partners and close associates of such individuals. The bill will require that senior bank officials exercise enhanced oversight of the accounts of these people and that their accounts be monitored on an ongoing basis. But banks have objected, saying the definition is too broad and the proposals impractical.
Banking Association SA MD Cas Coovadia said in an interview that banks were willing to ensure that they were not complicit in illegal activities by exercising greater scrutiny over such individuals, but this would be challenging in the absence of a database to identify the individuals concerned.
"The inclusion of close associates and family members presents additional challenges because this potentially has very wide scope," Mr Coovadia said. Would politically influential individuals include leaders of small political parties and their family members?
The Association for Savings and Investments SA also believed it would be difficult, if not impossible, to obtain the required information about these individuals and their families. "Until there is a reliable data source, accountable institutions should be able to rely on self-certification by clients," it said.
Another cause for concern is the bill’s requirement that accounting institutions identify and verify the ultimate beneficial owner of legal entities, trusts and partnerships.
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