PRESS RELEASEPROPOSED NEW ANTI-MONEY LAUNDERING LAW POSES INADVERTENT RISK TO NPO SECTOR
PRESS RELEASE BY CAUSE FOR JUSTICE: 7 OCTOBER 2022
* FOR IMMEDIATE RELEASE *
SUBJECT: PROPOSED NEW ANTI-MONEY LAUNDERING LAW POSES INADVERTENT RISK TO NPO SECTOR
The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill (the Bill) is currently before Parliament. At first glance, the Bill serves a necessary and legitimate government purpose and public interest, namely addressing money laundering and terrorism financing. However, human rights and public interest organisation, Cause for Justice (CFJ), warns that the current version of the Bill is likely to have a detrimental impact on the non-profit (NPO) sector which risks doing more harm than good.
The Bill seeks to amend certain provisions of the Nonprofit Organisations Act, 1997 (the Act). The NPO sector makes a vital contribution to the well-being of South African society by doing crucial public benefit work, often in the face of great financial challenges. Now Parliament’s Standing Committee on Finance (“the Committee”) is considering legislative amendments that will compel NPOs to register under and comply with the Act – or face criminal sanctions including imprisonment and fines.
This marks quite a drastic departure from the current state of affairs where registration is voluntary. Many NPOs choose not to register for a variety of legitimate and practical reasons, such as limiting the allocation of valuable resources to meet compliance obligations.
Of major concern, is the insufficiently short comment period. The Committee opened its call for public comments on Tuesday, 27 September 2022 until 12:00 (noon) on Monday, 10 October 2022 – a mere nine and a half business days. In addition, during this period South African public schools were on holiday break and the country was subject to ongoing loadshedding.
Cause for Justice cautions that it is crucially important that all South Africans be given an adequate opportunity to comment on the Bill. By allowing an inordinately short period for public comments, the Committee is falling foul of its constitutional obligation to facilitate effective public participation in the law-making process, it says. This opens the Bill to constitutional challenge on procedural grounds.
In addition, Cause for Justice questions whether the burden of placing additional compliance obligations on law-abiding citizens and NPOs subject to the threat of penalties and criminal justice consequences for non-compliance, is a constitutionally justifiable cost of reducing money-laundering in the NPO sector. In its preliminary written submissions, the human rights organisation asked the Committee to consider whether the proposed amendments are the least restrictive means – and therefore a constitutionally defensible way – to achieve the purpose of the Bill. It also urged the Committee to investigate whether making the NPO Act compulsory will in fact translate into the effective prevention of money-laundering.
Cause for Justice is committed to ensuring that South African laws effectively achieve constitutionally compliant purposes without causing unforeseen detrimental consequences.
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