Practical Implications of New Anti-Money Laundering Law For Religious Sector

Introduction:

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After a brief but intense Parliamentary process, President Ramaphosa signed the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill (the “Anti-Money Laundering Bill”) into law on 21 December 2022.

The initial version of the Amendment Bill provoked an uproar from the non-profit sector, because it proposed amongst other things, mandatory registration with the Department of Social Development (“DSD”) and criminal sanctions for non-compliance with the NPO Act. FOR SA put forward legislative proposals to prevent blanket mandatory registration, the imposition of criminal sanctions for non-compliance with the NPO Act, and the state regulation of religion.  

Parliament incorporated the most significant of FOR SA’s proposals in the final version of the Amendment Bill (now “Amendment Act”), mitigating the worst risks to the religious sector.

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The Anti-Money Laundering Amendment Act in a nutshell:

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1. Who needs to register and how does registration work?

Until now, the registration of non-profit organisations (“NPOs”) was completely voluntary. From 1 April 2023, when the Amendment Act is set to become fully operational, certain categories of NPOs will be obligated to register with the NPO Directorate – or face administrative sanctions. Unregistered religious organisations that fall within the category of affected NPOs therefore have until 31 March 2023 to register.

The affected NPOs are those that:

• Make donations to individuals or organisations outside of the Republic’s borders; or
• Provide humanitarian, charitable, religious, educational or cultural services outside of the Republic’s borders.

This means religious organisations that make donations to foreign nationals or entities, or that provide a wide range of social services (including sending missionaries) abroad, will need to register – even if these organisations are already registered in terms of other laws (for example, as Public Benefit Organisations (“PBOs”) with the South African Revenue Service under the Income Tax Act). The requirements for registration are set out in section 12 of the NPO Act.

• Register online by visiting the NPO Register website.
• Watch this informative video on the registration process.
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    2. What are the reporting and compliance requirements?

Both new registrants and those organisations that are already registered under the NPO Act, need to comply with the amended reporting and compliance requirements (set out in sections 17 and 18 of the NPO Act). These comprise keeping acceptable accounting records and reports, and providing these – with other information such as the particulars of the organisation’s office-bearers and its physical address for serving legal documents – to the NPO Directorate on a continual basis.

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   3. Are religious organisations who must register protected from State interference?

Parliament adopted FOR SA’s proposal to protect the founding documents (e.g. constitutions) of religious organisations from State interference. This is an important victory because these documents often reflect religious organisations’ beliefs and doctrines (for example, in respect of leadership and membership). The Director of NPOs may only require a registered religious organisation to amend its constitution in very limited circumstances, none of which are likely to pose a risk to that organisation’s constitutional right to freedom of religion.

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   4. What is the implementation timeline?

The DSD has confirmed that its draft Regulations will be published soon. It will invite the public to comment on the draft. This will provide members of the public – including the religious community – with an important opportunity to raise concerns and submit inputs on the content of the draft Regulations. Once the public participation process is completed, the DSD will publish the final Regulations, which will serve also as an implementation document.

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Conclusion:

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Affected religious organisations have until 31 March 2023 to ensure they comply with the amended NPO Act. This includes registering with the NPO Directorate and meeting all reporting and other compliance requirements.

The public engagement process on the upcoming draft Regulations is an important opportunity to ensure the maximum protection for freedom of religion (section 15 of the Constitution) and related rights – such as freedom of association (section 18 of the Constitution) and freedom of expression (section 16 of the Constitution), are upheld.

FOR SA will continue to monitor these developments and – once the draft Regulations are published for comment – will encourage the faith community to contribute to the finalisation of the Regulations.