EDITORIAL: Fear of greylisting is no excuse for bad law

SA’s need to introduce tighter legislation to fight corruption, money laundering and terror financing has never been more urgent.

But in the rush to tighten financial regulations the country’s legislators run the risk of introducing flawed legislation that is unlikely to pass constitutional muster, should it be interrogated further.  

In its 2021 mutual evaluation report on SA, which looked at anti-money laundering and counter-terrorist financing measures in the country, the Financial Action Task Force (FATF), an international body that establishes standards for the combating of money laundering and the financing of terrorism, noted SA has failed to demonstrate that it is effectively identifying, investigating, or prosecuting terrorist financiers or addressing it through alternative measures. It said terrorists are identified and deprived of their resources and means to finance or support their activities only to a negligible extent.

Subsequently, and under pressure from the influential international body, the ANC-led government recently introduced amendments to legislation meant to bolster efforts to curb illicit flows and the financing of terrorist organisations. These are the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill housed in the finance ministry, and the Protection of Constitutional Democracy Against Terrorist and Related Activities Amendment Bill, which falls under the police ministry.

In November, the ANC used its majority in the National Assembly to push through the former amid objections from most opposition parties. The bill, which introduces measures to disclose and track the beneficial owners of companies, trusts and nonprofit organisations [NPOs], is seen by the government as a crucial step for SA to avoid greylisting by the FATF. Greylisting, which essentially means the country is seen as a high-risk jurisdiction in which to transact, will increase the costs of cross-border payments and taint SA’s image among international investors. 

Opposition parties rightly opposed the bill on the grounds that it was rushed and wasn’t properly thought through. They highlighted, for example, that it will make it difficult for legitimate NPOs involved in worthy causes to operate, by introducing unnecessary red tape.

While the National Treasury had amended the bill to change the mandatory registration of all NPOs to the requirement that only NPOs involved in the sending and receiving of money abroad must register, the DA and ACDP opposed registration.

The DA also opposed the regulation that places the directorate responsible for the registration of NPOs in the department of social development, which has been widely criticised for its inefficiency and is sometimes at the root of the need for the NPOs in the first place.

The ACDP criticised the bill for requiring even those NPOs that are already registered with the Companies and Intellectual Property Commission, Sars or the Master's Office (as charitable trusts) to be registered with the directorate.

Civil society has also raised similar concerns about the Protection of Constitutional Democracy Against Terrorist and Related Activities Amendment Bill, which is likely to be adopted by the NCOP on Tuesday.

The objectives of the bill include expanding the definition of terrorism, criminalising publication of terrorism-related content and introducing stiffer penalties for transgressors. Some of the concerns raised by civil society groups include the broad definition of terrorism, which could criminalise many NPOs. One NPO noted that the current definition contains various broad phrases that are open to abuse.

“This is of specific concern given that recent events have seen where the department of health labelled civil society organisations involved in enabling public comments on the department’s proposed health regulations as ‘instigating terrorism’ and/or ‘sabotage’,” FOR SA, a nonprofit legal advocacy organisation, stated in a recent submission.

Furthermore, potentially any person, group or organisation that criticises the government or expresses opposition to government policy or positions can be labelled as a terrorist under the bill due to the clauses on “encouragement” and “indirect facilitation of terrorism”, Dear SA, a civil society group which seeks to promote and encourage transparent governance, pointed out.

NPOs play a key role in building stable societies by providing emergency welfare services, bringing awareness to important social and political issues that need attention, and sometimes litigating to ensure justice for those who cannot afford it. Every effort must be made to ensure that they function optimally.

Their concerns are valid and should be taken seriously as they go to the very heart of our constitutional democracy. Policy and legislation should always be introduced carefully, and especially so in this case.