1.2 The Bill is the product of the Task Team on Money Laundering appointed by the Minister of Finance. The mandate of the Task Team was to -

1. review the appropriateness of the draft Bbill prepared by the South African Law Commission in August 1996 pursuant to an investigation by the Law Commission on administrative measures to combat money laundering;
2. consult with representatives of institutions which will need to implement the legislation;
3. ensure the legislation is appropriate to South African circumstances;
4. make recommendations on an appropriate institutional framework for the effective implementation of the legislation.

1.3 The Bill reflects the main proposals of the Task Team, which were accepted by the Minister of Finance, subject to certain amendments requested by the South African Police Service, the South African Reserve Bank, the South African Revenue Service, the Ministry for Intelligence Services, the Department of Justice and the National Prosecuting Authority.

1. The object of the Financial Intelligence Centre Bill is to complement the Prevention of Organised Crime Act, 1998, by introducing mechanisms and measures aimed at preventing and combating money-laundering activities. It sets up an anti-money laundering regulatory regime which encourages voluntary compliance and self-regulation by institutions which may be exploited for money laundering purposes.
2. The Bill establishes a Financial Intelligence Centre (the "Centre"). The Centre will not be an investigative body, but will co-ordinate policy and efforts to counter money-laundering activities. and iIt will act as a centralised repository of information relevant for investigating authorities. The Centre’s functions are to:

1. collect, process, analyse and interpret information obtained by it;
2. inform, advise and cooperate with investigating authorities;
3. supervise compliance with the Act; and
4. give guidance to institutions to combat money-laundering activities.

1. It is proposed that the Centre should be a juristic person outside the public service but within the public administration as envisaged by section 195 of the Constitution, and that it should be accountable to the Minister of Finance. It will derive its funds mainly through the national budget.
2. A Director appointed by the Minister of Finance will head the Centre. The Director may appoint staff and will, subject to the policy and security directions of the Minister, take all decisions on behalf of the Centre, although the Director may delegate powers to staff of the Centre. Staff may also be seconded to the Centre from other government departments, such as the South African Police Service and the National Prosecuting Authority. The Director will also be the accounting authority of the Centre for purposes of complying with the Public Finance Management Act, 1999 (Act 1 of 1999).
3. The Bill also establishes a Money Laundering Advisory Council. This will be an advisory body for the Minister of Finance on policies and measures to combat money laundering. In addition it will act as a forum in which the Centre, accountable institutions and supervisory bodies can consult on anti-money laundering policies and measures. The Council therefore gives practical expression to the notion of a partnership between government and the private sector in the fight against organised crime with special reference to money laundering.
4. The Council will be composed of representatives of all role players concerned in combating money-laundering activities. It will not have any executive or regulatory powers.
5. The Bill contains a list of accountable institutions, i.e. those institutions that may, in the ordinary course of organised crime, be exploited for money laundering purposes. It is proposed that the Minister is given the power to add further institutions or categories of institutions to the list and to remove institutions from the list as circumstances may require. The Bill also gives the Minister the power to exempt accountable institutions, or certain kinds of transactions conducted by accountable institutions, from the obligations imposed by the Bill.
6. Listed accountable institutions are required by the Bill to implement internal administrative systems to ensure that they know their customers, report suspicious and certain cash transactions to the Centre, and keep record of their customers. They are also required to train their employees to recognize and deal with suspected money-laundering transactions.
7. Certain statutory bodies and functionaries established by legislation to regulate specific categories of institutions are also listed in the Bill as "supervisory bodies" and are required to perform certain reporting functions, e.g. to report any suspicious transactions concluded by any of the institutions they supervise.
8. Enforcement of the provisions of the Bill is backed by penal and administrative sanctions. The administrative sanctions apply only to accountable institutions, and provide for non-judicial procedures that may be utilised by the Centre against offending accountable institutions provided certain conditions are met, e.g. that the National Director of Public Prosecution does not direct that the offence merits a criminal prosecution and that the institution concerned submits to the administrative procedure and consents to a proposed penalty against it. Submission by an accountable institution to the administrative procedures indemnifies the offending institution against any subsequent criminal prosecution, but any finding and order made, and any amount forfeited by the institution pursuant to the administrative procedures, must be made public.
9. The Bill, together with the Prevention of Organised Crime Act, 1998, will produce an anti-money laundering regime substantially in compliance with the recommendations of the Financial Action Task Force on Money Laundering, a multi-lateral body which co-ordinates international anti-money laundering policy. The Bill aims to achieve this compliance without making unnecessary or inappropriate demands on the country’s resources.

3. THE PROVISIONS OF THE BILL

1. Section 1 defines the important words and phrases used in the Bill.
2. Sections 2, 3, 4, and 5 deal with the establishment, objectives, functions and general powers of the FIC. Section 2 provides for the FIC to be established outside the public service but within the public administration as a juristic person. Section 3 determines the objective of the Centre and Sections 4 and 5 itemize the FIC’s functions and its general powers.
3. Sections 6, 7, 8, 9, 10, 11, 12 and 13 relate to the administration of the FIC. Sections 6 and 7 provide for the appointment of the director and acting director and in Section 8 the director’s responsibilities are set out. Section 9 determines the staff establishment of the FIC and Section 10 provides for their pension rights. In Section 11 the sources of the FIC’s funds are specified. Section 12 provides for the FIC to be audited by the Auditor-General. Section 13 permits the Director to delegate powers to the staff of the FIC and determines the basis on which those delegations occur.
4. In Section 14 the Money Laundering Advisory Council is established. Section 15 sets out its functions and Section 16 its composition. Procedural matters are dealt with in Section 17.
5. In chapter 3 (Sections 18, 19 and 20) the Bill is made to apply to all accountable institutions and supervisory bodies referred to in schedule 1. The Minister is accorded the power, on specified terms, to amend the list of accountable institutions and supervisory bodies and to exempt accountable institutions and certain categories of transactions from the provisions of the Bill. These provisions render the anti-money laundering regime established by the Bill flexible and adaptable to changing circumstances while permitting less significant transactions and smaller institutions to be exempted from some or all of the provisions of the Bill.
6. Chapter 4 (Sections 21 to 41) contains the money laundering control measures with which accountable institutions and other persons will be required to comply.
7. In Section 21 accountable institutions are required to identify their clients before establishing a business relationship or concluding a single transaction with them.
8. In Section 22 accountable institutions are required, within a reasonable time after the commencement of the Act, to identify their existing clients and are prohibited from concluding transactions with new clients before having identified them. The "know your client" principle which is reflected in Sections 21 and 22, together with the record keeping and reporting requirements referred to below, is central to anti-money laundering regimes world-wide.
9. Section 23 requires accountable institutions to keep records of their clients and transactions concluded with their clients. In terms of Section 24, these records must be kept for five years after a transaction is concluded or a business relationship is terminated.
10. Section 25 permits large conglomerates which contain within them two or more accountable institutions to centralise their records.
11. Section 26 provides for the admissibility of records as evidence in court proceedings.
12. In terms of Section 27 the Centre is granted access to records held by accountable institutions and supervisory bodies on authority of a warrant where there are reasonable grounds to believe that those records may assist the Centre to combat money laundering.
13. Sections 28 and 29 requires accountable institutions to report suspicious transactions and cash transactions above a threshold determined by the Minister to the Centre. Section 29 requires accountable institutions to report suspicious transactions to the Centre and creates certain offences relating to unauthorized disclosure of those reports. These reporting requirements will complement the "suspicious transaction" reporting requirement in section 7 of the Prevention of Organized Crime Act, 1998. Section 3030 requires electronic transactions above a determined threshold also to be reported. Section 311 requires supervisory bodies to report any suspicious information that comes to their attention and to retain records regarding their suspicions. Section 322 requires the reporting of all cash above a determined threshold, which is conveyed into or out of the Republic. Collectively together with Section 7 of the Prevention Act, these provisions produce the flow of information on which the Centre will largely rely in order to combat money laundering and identify transactions which constitute evidence of the commission of other crimes.
14. Section 33 (1) authorizes all persons (including those who are not accountable institutions) to make reports to the Centre regarding suspected money laundering activities. Section 33 (2) incorporates the provisions of section 7A of the Prevention of Organized Crime Act 1988, which are repealed by Section 54 of the Bill, into the Bill.
15. Section 33 determines the reporting procedures with which accountable institutions must comply. Section 345 permits accountable institutions to continue with transactions, having reported them, subject to Section 356 which enables the Centre to order the suspension of a transaction for a maximum of five days to enable it to collect information, analyse it and, if appropriate, refer it to investigating authorities and the National Director of Public Prosecutions who is empowered under the Prevention of Organised Crime Act, 1998, to apply to court for freezing orders.
16. Section 36 provides for judge-authorized monitoring orders of accounts at accountable institutions, which are reasonably suspected of being used for money laundering purposes.
17. Section 377 provides that no confidentiality rules other than attorney-client privilege affect compliance with the reporting requirements of the Bill. Section 388 protects the disclosure of the identity of persons making reports.
18. Section 399 provides for the admissibility in a court of certificates issued by an official of the Centre regarding information reported to the Centre. Section 4040 sets out who is entitled to information held by the Centre and Section 411 prohibits the disclosure of such information in any circumstances other than those set out in that section.
19. Section 422 requires accountable institutions to formulate internal anti-money laundering policies in the spirit of self-regulation.
20. Chapter 5 (Sections 433 to 5050) of the Act provides for its enforcement.
21. Sections 433 to 477 provide for an administrative enquiry process which accountable institutions accused of contravening the provisions of the Act may agree to subject themselves to in exchange for an indemnity in respect of criminal prosecution. The sections provide for expedited proceedings that may conclude with an admission of a contravention and agreement on an appropriate penalty. All findings and orders in terms of the administrative process must be made public. No administrative procedure may be followed where the National Director of Public Prosecutions directs that a criminal prosecution would better serve the interests of justice. If an accountable institution does not submit itself to the administrative procedure, the Centre is required to forward all evidence at its disposal to the National Director of Public Prosecutions.
22. Section 44 regulates enquiry procedures and section 4545 confers powers on the person conducting the enquiry to summon witnesses, require the production of documents and question persons.
23. Section 466 provides for findings and orders and sets out the matters, which the person conducting the enquiry must consider before making an order.
24. In terms of Section 477, the record of the proceedings of an inquiry is not admissible in criminal proceedings.
25. Section 488 lists the offences that may be committed by persons. Section 499 lists the offences that may be committed by accountable institutions and Section 50 lists the offences that may be committed by supervisory bodies. Section 5050 sets out the penalties applicable to contraventions.
26. Chapter 6 (Sections 511 to 565) contains miscellaneous provisions. Section 512 authorises the Minister to make regulations and to differentiate between different accountable institutions and different kinds of transactions.
27. Section 533 indemnifies the Minister, the Centre and employees and other representatives of the Centre from liability for any thing done in good faith in furthering the objects of the Act.
28. Section 5454 inserts a new offence in the Prevention of Organized Crime Act, 1998, namely the offence of "smurfing" or "structuring" transactions to avoid anti-money laundering reporting requirementsrepeals the provisions of sections 7 and 7A of the Prevention of Organised Crime Act, 1998 to eliminate duplication between the provisions of that Act and this Bill.
29. Section 55 exempts accountable institutions from the provisions of Section 7 of the Prevention Act in respect of matters which must be reported in terms of this Act.
30. Section 565 contains the short title and date of commencement of the Act.
31. Schedule 1 lists the accountable institutions and Schedule 2 lists the supervisory bodies to which the Act will apply.

4.1 As the Bill deals with the administration of justice, the procedure set out in section 75 of the Constitution should apply to the Bill in the parliamentary process.

1. Prior to the appointment of the Task Team wide consultation on the principles contained in the Bill was conducted by the South African Law Commission in the process of preparing its Report on Money Laundering and Related Matters of August 1996.
2. The Task Team identified the parties listed below for further consultations regarding changes to the Law Commission’s proposals and the preparationdevelopment of its report to the Minister and this Bill. All consultations regarding the Bill were conducted in person by members of the Task Team and, in some cases, by officials of the Department of Finance.
3. Each of the parties mentioned below was given an opportunity to meet with the Task Team or the Department of Finance at least once and was also given the opportunity to make written submissions to the Task Team and/or the Department of Finance. Several of the parties who are likely to be most affected by the provisions of the Bill, or who represent institutions which are likely to be most affected, such as the banks, the South African Police Service, the Department of Justice and the National Prosecuting Authority were also given the opportunity of further meetings with the Task Team and the opportunity to comment on the first draft report of the Task Team and various earlierprior drafts of the Bill.
4. The following are the parties who were consulted by the Task Team and the Department of Finance in the course of the Task Team’s preparation of its final report to the Minister dated June 1999 and of the Financial Intelligence Centre Bill, 2000 -

0. Life Offices Association;
1. Johannesburg Stock Exchange;
2. Gauteng Gambling Board;
3. SA Insurance Association;
4. SA Police Service;
5. Ministry for Safety and Security;
6. Ministry for Intelligence Services;
7. Ministry of Justice and Constitutional Development;
8. National Association of Stokvels of SA;
9. Association of Law Societies;
10. Association of Unit Trusts;
11. Council of South African Banks;
12. Internal Audit Department, Standard Bank;
13. Financial Services Board;
14. South African Reserve Bank;
15. Prevention of Organised Crime Act Project;
16. South African Law Commission;
17. Money Laundering Forum of SA;
18. Estate Agents Board;
19. South African Revenue Service;
20. Institute of Realtors;
21. Mines Pension Fund;
22. Institute of Chartered Accountants;
23. Commonwealth Secretariate, London;
24. South African High Commission, London;
25. SA Bond Exchange;
26. Freight Forwarders Association;
27. People's Bank (now defunct);
28. National Crime Prevention Strategy;
29. Office for Serious Economic Offences;
30. National Directorate of Prosecutions;
31. Asset Forfeiture Unit;
32. Embassy of France;
33. Ministry of the Interior (Money Laundering Section), France;
34. HM Treasury, London;
35. Professor Angela Itzikowitz, University of the Witwatersrand;
36. Peter Cromhout and Dr Richard Harms - PriceWaterhouseCoopers South Africa and USA.