2025 AML/CTF Amendment Bill: Essential Compliance Changes in South Africa You Need to Know

In December 2024, South Africa’s Treasury introduced the draft AML and CTF Amendment Bill, inviting public feedback to enhance the country’s financial compliance framework. This legislative effort aims to address South Africa’s greylisting status, a significant hurdle to its global regulatory reputation since February 2023, and aligns local regulations with international standards.

Objectives of the AML and CTF Amendment Bill

The primary goals of the amendment bill include:

• Strengthening financial compliance measures
• Preparing for the upcoming evaluation by the Financial Action Task Force (FATF)
• Harmonizing five key pieces of legislation

Upcoming Evaluations and Compliance Standards

The FATF plans to conduct a Mutual Evaluation Report (MER) in early 2025, followed by an on-site review in May to assess South Africa’s progress on action items. The amendment bill proposes several noteworthy changes to improve compliance:

• Enhanced Risk Management: Financial institutions must account for technological risks in their comprehensive risk management strategies.
• Due Diligence Requirements: Enhanced due diligence (EDD) is now mandatory for all high-risk clients, particularly regarding the verification of the source of funds.
• Beneficial Ownership Disclosure: Companies and trusts are required to maintain a public register disclosing individuals holding at least 25% of ownership or voting rights.

Reporting Obligations and Penalties

Critical amendments also include:

• Suspicious Transaction Reports (STRs): Must be filed with the Financial Intelligence Centre (FIC) within 15 business days.
• Terrorist Property Reports (TPRs): Clear procedures and deadlines have been established for compliance.
• Compliance Directives: The FIC can now issue real-time compliance directives and perform unannounced inspections.

Non-compliance can lead to hefty fines, reaching up to R10 million or 10% of a company’s turnover for repeated violations. In severe cases of money laundering, offenders could face up to 15 years in prison or substantial fines.

Technological Advancements in Compliance

The amendment bill encourages the adoption of innovative technologies like biometric verification and electronic Know Your Customer (e-KYC) solutions to improve client identity verification accuracy.

Broader Implications for Various Sectors

According to Bradley Elliot, CEO of RelyComply, compliance obligations extend beyond traditional financial institutions to include legal firms, real estate agencies, and non-profits. The bill emphasizes the necessity for these entities to implement robust AML/CTF procedures to mitigate risks associated with non-compliance.

Proactive Risk Management and International Cooperation

South African businesses are urged to adopt a proactive stance in identifying and managing risks linked to emerging technologies and financial products. The amendment bill also promotes international cooperation, facilitating the sharing of compliance information among global AML bodies.

Conclusion: A Call to Action for South African Businesses

With increasing penalties for non-compliance and a more rigorous regulatory framework, the AML/CTF Amendment Bill reflects South Africa’s dedication to enhancing its regulatory environment. Businesses must review their AML/CTF measures in preparation for the FATF evaluation, ensuring readiness to meet new compliance requirements as the bill’s implementation date approaches.

For additional insights on compliance measures, visit The Financial Intelligence Centre.