National Assembly - 11 October 2001
THURSDAY, 11 OCTOBER 2001 __
PROCEEDINGS OF THE NATIONAL ASSEMBLY
____
The House met at 14:04.
The Speaker took the Chair and requested members to observe a moment of silence for prayers or meditation.
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.
APPOINTMENT OF ACTING CHIEF WHIP OF MAJORITY PARTY
(Announcement)
The SPEAKER: Order! Hon members, I wish to advise the House that the hon Mr T S Yengeni has resigned as Chief Whip of the Majority Party, and further that Mr G Q M Doidge has been appointed as Acting Chief Whip of the Majority Party with effect from 8 October 2001. [Interjections.] [Laughter.] [Applause.] Hon member, that was no licence for the Whippery to engage in this kind of cross-floor talk. [Interjections.]
NOTICES OF MOTION
Nkskz C I GCINA: Mhlalingaphambili, ndivakalisa isaziso sokuba, xa le Ndlu ihlangana kwakhona, ndiza kuphakamisa, egameni leANC:
Okokuba le Ndlu -
(1) iqaphele ngovuyo nemincili undwendwelo kutsha nje lukaMongameli negqiza lakhe eJapan;
(2) ikholelwa ekubeni amazwe angaphandle aneembono ezintle ngeli lizwe lethu, uMzantsi Afrika, yaye amxabisile kakhulu uMongameli noRhulumente wethu;
(3) ikholelwa ekubeni iimbono nezimvo ezintle ngeli lizwe zisisiphumo somgaqo-nkqubo omhle we-ANC osekelwe phezu kokudala ubuntu nothando phakathi koluntu, nokuphuhlisa uqoqosho ukuze kuhluthe bonke abantu; nokuba
(4) iyamncoma uMongameli noRhulumente ngamalinge neenzame azenzayo zokuphuhlisa uqoqosho nokudala imisebenzi.
Ngako oko ithi: Ngxatsho ke! Ukwanda kwaliwa ngumthakathi.
[Kwaqhwatwa.] (Translation of Xhosa notice of motion follows.)
[Mrs C I GCINA: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes with appreciation the hon President’s recent visit to Japan with his entourage;
(2) believes that foreign countries have a good perception of our country, South Africa, and that they hold our hon President and our Government in high esteem;
(3) believes that this is a result of the policy of the ANC which is based on promoting humanity and love among people, and developing the economy so that poverty could be eradicated and all the people could have a good life; and
(4) praises the hon President and the Government for their efforts in trying to develop the economy and creating jobs.
The House says: Forward with the good work! [Applause.]]
Dr J T DELPORT: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP:
That the House -
(1) notes with concern the findings of the Auditor-General of irregularities and possible fraud in the deposit account of the Department of Justice, an account which handles more than R2 billion in public money every year;
(2) further notes that the Auditor-General refers to -
(a) staff incompetence;
(b) failure to act against nonperforming staff;
(c) improper internal controls;
(d) money not properly accounted for; and
(e) the risk of substantial fraud;
(3) expresses its concern that the Auditor-General believes it will take more than five years to correct these problems; and (4) calls on the Minister for Justice and Constitutional Development to address this situation or resign.
[Interjections.]
Mr J H SLABBERT: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP:
That the House -
(1) notes that the proposal to reintroduce railway police officers trained to deal with railway-related crime is under consideration; and
(2) further notes that hopefully the reintroduction of railway police, if the proposal is accepted, will -
(a) result in a decrease of crime committed on trains; and
(b) give more people the confidence to make use of the trains.
Mr G C OOSTHUIZEN: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that President Thabo Mbeki, together with other African leaders, had a meeting with the European Union to discuss the New Africa Initiative;
(2) reports that the European Union supported the New Africa Initiative enthusiastically after this meeting;
(3) further notes that -
(a) the European Union committed itself to a twice-a-year meeting
with the initiative's steering committee and further decided to
establish a permanent link between the New Africa Initiative
task forces; and
(b) this agreement was made possible by the central role played by
President Thabo Mbeki with the support of his African
counterparts;
(4) believes that this agreement is the first of its kind since African leaders joined forces and pledged a common vision and a shared conviction to ensure the continent’s sustained growth and development;
(5) further believes that the success of the New Africa Initiative depends on the constructive partnership between the developed countries and the continent, which is founded on the realisation of common interest, benefit and equality; and
(6) commends the European Union for supporting the New Africa Initiative.
Adv A H GAUM: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP:
That the House -
(1) notes that Government has timeously reversed its ill-considered decision to ban foreign involvement in South Africa’s private security industry;
(2) observes that serious damage to South Africa’s reputation as a country that welcomes foreign investment and supports free enterprise has been narrowly avoided;
(3) applauds Minister Tshwete for heeding the urgent appeals of the DA and others in this matter, and urges the Minister of Finance and the Minister of Trade and Industry to take a strong interest when such misguided and ill-informed actions so severely threaten South Africa’s trade prospects; and
(4) notes that the resolution of this matter in this way further emphasises the important role of the DA as a clear-thinking constructive and effective opposition in Parliament.
[Interjections.] [Applause.]
The SPEAKER: Order!
Miss O N MNDENDE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the UDM:
That the House -
(1) conveys its condolences and sympathy to the family of Ms C Mamfene Johnson who was a UDM and Civic member in Samora Machel, who was gunned down last night in an apparently politically motivated attack;
(2) is deeply distraught that, despite constitutionally guaranteed rights to freedom of association and expression, South Africans continue to be killed because of their political views;
(3) acknowledges that the UDM is aware of the strain on the police and the courts, but that the UDM is increasingly uncomfortable with the slow pace of investigations into the matters pertaining to the deaths and continued killing of UDM members; and
(4) expresses its concerns regarding the apparent incapability or perhaps even worse, the unwillingness of the ANC to teach its members tolerance and peaceful political dialogue.
[Applause.]
Ms N D NGCENGWANE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that the ANC Women’s League holds a consultative conference over this weekend, starting today;
(2) further notes that -
(a) the consultative conference theme is ``Women marching together
into the African Century"; and
(b) the conference will be attended by 800 delegates from all
structures of the women's congress movement, the international
friends of the ANC Women's League, high commissioners of various
countries in South Africa and local sister organisations; and
(3) wishes the ANC Women’s League well in its deliberations during this conference.
Igama lamakhosikazi malibongwe! Wathint’ abafazi, wathint’ imbokodo, uzakufa! [The women should be praised! When you strike a woman, you strike a rock!]
Mr L M GREEN: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ACDP:
That the House -
(1) notes with great concern that -
(a) the deadline given to the general public to comment on the new
draft revised Curriculum 2005 is Friday, 12 October 2001;
(b) a great many public institutions such as the governing bodies of
schools, public libraries, colleges and universities do not have
access to a hard copy of the 1 400-page revised curriculum and
therefore cannot respond before the prescribed deadline;
(c) although the document in question is dated 30 July 2001, its
actual availability is questionable; and
(d) although the document is available on the Internet and can be
downloaded, the printing of 1 400 pages is a laborious and
costly exercise, and the Internet is still an unaffordable
luxury to the vast majority of South African citizens; and
(2) therefore calls on the Minister of Education to -
(a) extend the deadline for inputs to 31 December 2001;
(b) ensure that at least every school governing body, college and
university has a hard copy of the controversial Curriculum 2005
...
[Time expired.] [Applause.]
Mnr C AUCAMP: Mevrou die Speaker, ek gee hiermee kennis dat ek op die volgende sittingsdag namens die AEB sal voorstel:
Dat die Huis -
(1) kennis neem dat die AEB ‘n beroep doen op alle Suid-Afrikaners om hulle volle samewerking te gee met die sensusopname wat gister begin het;
(2) van mening is dat die sensus noodsaaklik is vir sowel effektiewe regering as vir die ordelike funksionering van burgerlike organisasies;
(3) glo dat die lede van elke gemeenskap moet weet dat deur nie getel te word nie, jy net jou eie gemeenskap benadeel;
(4) in die lig van die veiligheidsituasie op plase, ‘n spesiale beroep op sensusopnemers doen om konsekwent vooraf afsprake te maak vir besoeke en sowel hulself as hul voertuie duidelik te identifiseer; en
(5) sy afkeur uitspreek oor die onsinninge en inkriminerende reëling dat elke sensusopnemer met vier kondome toegerus word en vra dat die agb Minister sal kennis neem: ``Dit is ‘n belediging vir elke sensusopnemer. Hulle wil tel, meneer, hulle wil nie teel nie!’’
[Gelag.] (Translation of Afrikaans notice of motion follows.)
[Mr C AUCAMP: Madam Speaker, I hereby give notice that on the next sitting day I shall move on behalf of the AEB:
That the House -
(1) takes note that the AEB appeals to all South Africans to give their full co-operation to the census survey which started yesterday;
(2) is of the opinion that the census is essential both for effective governance and for the orderly functioning of civil organisations;
(3) believes that the members of every community should be aware that by not being counted, they will only prejudice their own community;
(4) in view of the safety situation on farms, makes a special appeal to enumerators consistently to make appointments to visit beforehand, and to identify themselves and their vehicles clearly; and
(5) expresses its disapproval of the absurd and incriminating arrangement that every enumerator will be furnished with four condoms, and asks the hon Minister to note the following: ``It is an insult to every enumerator. They want to count people, sir, not breed!’’
[Laughter.]] Mr M T GONIWE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that -
(a) yesterday, 10 October, was the World Day of Solidarity with
Cuba; and
(b) the South African Friends of Cuba Society, in a joint initiative
with the Cuban Embassy, hosted a gala performance at the
Waterfront to celebrate the event, and will also host a Cuban
film festival which will give the public an insight into the
origins, history and morality of the Cuban revolution;
(2) believes that the Government and the people of Cuba continue to serve as an inspiration of progressive values of international solidarity, freedom and equality; and (3) joins progressive internationalists in celebrating the World Day of Solidarity with Cuba and reiterates its belief that the struggle of the people of Cuba to end the US blockade is our struggle for a better continent and a better world.
[Applause.]
Mr R JANKIELSOHN: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the DP:
That the House -
(1) notes that -
(a) the Minister of Safety and Security, through an answer to a
parliamentary question, has confirmed that the SA Police Service
are investigating allegations of fraud and intimidation against
ANC member of Parliament, Mr Bheki Radebe;
(b) these charges have been laid by members of the community from
Thembalihle in Vrede who are fed up with the ANC's broken
election promises;
(c) these people, many of whom are unemployed and pensioners, could
lose their property as a result of these actions; and
(d) this proves that the ANC's Batho Pele campaign is laced with
ambiguity; and
(2) calls on the SA Police Service to carry out a thorough investigation into these allegations and bring Mr Bheki Radebe to justice.
[Applause.]
Mr M T GONIWE: Madam Speaker, on a point of order! Is this motion which is being moved about some member we do not know not a substantive issue?
The SPEAKER: Order! Well, I am not going into whether it is a member that you know. The Rules are clear. What we have heard in the past few days is members trying to raise issues which should be raised by way of a substantive motion as a notice of motion. I have written to the member who did this two days ago to ask that if it is a substantive motion, it should be tabled in the House, and not simply raised as a notice of motion. I will follow that up in this case as well. [Interjections.]
Mr K M ANDREW: Madam Speaker, with all due respect, in respect of the notice of motion just moved, in this instance the member, as I heard it, simply referred to an action taken by a prosecuting authority and was not, in fact …
The SPEAKER: Order! Thank you, Mr Andrew. I said I would look at it. [Interjections.] I am not going to comment on something that I have just heard. Please proceed, hon member.
Mrs L R MBUYAZI: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the IFP: That the House -
(1) is concerned about the level of toxicity under which the residents of the Clairwood shack settlement in Durban live as a result of the industrial railway line transporting a variety of deadly fuel and chemical products for the Engen and Sapref refineries, and for Mondi and Bayer;
(2) regrets that some children as young as 15 years old suffer and have died as a result of lung disease due to an underground leak of 750 000 litres of petrol from Shell and Sapref refineries;
(3) calls upon these refineries to rectify the problem so that the lives of the indigent residents could be spared; and
(4) requests the Durban Metro Council to allocate decent land to these residents to ensure quality of life.
Mr J H NASH: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the ANC:
That the House -
(1) notes that Meadowlands Police Station and Garankuwa Hospital have been nominated in the Public Service category of this year’s National Productivity Award;
(2) further notes that -
(a) the management at the police station concentrated on improving
existing resources by concentrating on capacity-building, and
extended its crime-prevention capacity through systematic
involvement of the community in crime prevention; and
(b) the hospital had to overcome serious obstacles by reallocating
resources and providing computer training for its staff members;
and
(3) congratulates both Meadowlands Police Station and Garankuwa Hospital on being nominated for this year’s National Productivity Award in the Public Service category.
[Applause.]
Dr P J RABIE: Madam Speaker, I hereby give notice that on the next sitting day of the House I shall move on behalf of the New NP:
That the House -
(1) notes that the latest Intergovernmental Fiscal Review shows that provinces have been closing their eyes to the human misery and destruction being wrought by HIV/Aids, and that they have therefore failed to plan adequately for managing the epidemic, particularly in the key fields of health, social welfare and education; (2) urges the Government to accept that HIV/Aids is a reality that cannot be avoided, and to recognise that failing to act leads directly to the deaths of thousands of South Africans every week; and
(3) calls on the Government to therefore implement concrete plans, including a mother-to-child HIV transmission prevention programme, to reduce the number of South Africans who become victims of this disease.
TAKE PART IN PARLIAMENT CAMPAIGN
(Draft Resolution)
The ACTING CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move without notice:
That the House -
(1) notes that Parliament has launched the “Take Part in Parliament Campaign” the purpose of which is - (a) to promote an understanding of Parliament;
(b) to educate and inform the South African public of what happens
in Parliament;
(c) to educate the public on how laws are made; and
(d) to educate the people of South Africa on how they can
participate in the lawmaking process, in order to promote an
increased awareness of -
(i) Parliament;
(ii) how it functions; and
(iii) how laws are made,
so that the people of our nation are better able to participate in
the legislative process and are better informed on issues around
which key legislation is being developed;
(2) therefore applauds this initiative of Parliament; and
(3) calls on all Members of the House to take this campaign into their constituencies so that they are better able to serve the people and the nation.
Agreed to.
BEST WISHES TO MATRIC STUDENTS
(Draft Resolution)
Mr M J ELLIS: Madam Speaker, I move without notice:
That the House -
(1) wishes all matric students well in their final examinations; and
(2) believes that their hard work over the past year will lead to successful results.
Agreed to.
ESTABLISHMENT OF JOINT COMMITTEE
(Draft Resolution)
The ACTING CHIEF WHIP OF THE MAJORITY PARTY: Madam Speaker, I move the draft resolution printed in my name on the Order Paper, as follows:
That the House, subject to the concurrence of the National Council of Provinces, establishes a joint committee in terms of Joint Rule 111 to consider the Revenue Laws Second Amendment Bill, 2001.
Agreed to.
FINANCIAL INTELLIGENCE CENTRE BILL
(Second Reading debate) The MINISTER OF FINANCE: Madam Speaker, hon members, today I introduce the Financial Intelligence Centre Bill to Parliament for its Second Reading. Hon members are asked to consider the introduction of an extensive antimoneylaundering regime into our legislation. The Financial Intelligence Centre Bill is placed before hon members today after a thorough process of discussion, research and drafting over the past four years.
This Bill has been long in finalising, to the frustration, I am sure, of some people. However, what we have before us today compares with some of the best and most comprehensive antimoney-laundering legislation anywhere in the world.
The Financial Intelligence Centre Bill is the product of a comprehensive consultative process involving the SA Law Commission, a task team appointed by the Ministry of Finance, all major stakeholders in South Africa and international bodies such as the Financial Action Task Force, the Commonwealth Secretariat, the UK’s National Criminal Intelligence Service, the US department of justice and the US treasury, and Australia’s FIU, and Austrac - the Australian Transaction Reports and Analysis Centre.
Accordingly, the Financial Intelligence Centre Bill draws extensively on international best practice and provides our Government with the tools to play an important role in combating all manner of money- laundering activities. A number of institutions and individuals made representations to the committee hearings. We have listened carefully and have sought to ensure that all of these concerns have been fully taken into account in the final drafting of the Bill.
The Bill is also the product of a very constructive joint effort by the Portfolio Committees on Finance and on Justice and Constitutional Development. I would like to thank the chairpersons of these committees and their members for the very significant effort they put into hearing and accommodating public comments on the Bill, interrogating the rationale and thinking behind its provisions and making appropriate amendments. I have no doubt that the Bill, which is now before the House, is a much improved product and the product of a thoroughly democratic process.
The Bill complements the Prevention of Organised Crime Act which was adopted by Parliament in 1998. The Prevention of Organised Crime Act specifically criminalised money-laundering and required suspicious transactions to be reported to the commercial crime branch of the SAPS. But the Prevention Organised Crime Act fell short insofar as establishing a dedicated financial intelligence unit to interpret those reports or to monitor compliance with those reporting obligations is concerned. Nor did it impose the relevant know-your-client training and record-keeping obligations in respect of those sectors which are believed to be the most susceptible to money-laundering. These deficiencies are rectified in the Financial Intelligence Centre Bill.
Money-laundering activities are undertaken by those who wish to disguise the source of ill-gotten gains, for example money or property, rendering it legitimate and often taxable income. Money-laundering is one way for criminals to ensure that crime pays.
As defined in the Bill, money-laundering means an activity which has the effect of converting the proceeds of unlawful activity, and of disguising the nature and the source of the money and the ownership thereof.
The money-laundering process is typically broken down into three phases: placement, when the illegal or dirty money is placed into the financial system; layering, when the criminal tries to obscure the link between the funds and the illegal activity through a number of complex transactions to obscure its true origin, and integration, when the funds are reintegrated into the financial sector again so that it appears to be legitimate or clean money, and in so doing it ends up as profit for the criminal. After the funds are clean, the criminal often moves the now legitimate funds into mainstream economic activities, such as business investments, real estate or luxury goods.
We also know that money-laundering is often associated with various forms of tax evasion. Money-laundering and tax evasion are often two sides of the same coin. This might explain why it is often said that the term ``money- laundering’’ originated in Chicago during the 1930s with the tax evasion activities of Al Capone.
However, the term money-laundering was first used more recently, and in a
more political context, to describe the nefarious movement of campaign
funds during the Watergate scandal involving President Richard Nixon.
Antimoney-laundering steps involve the paper trail'' of financial
transactions seeking to disguise ill-gotten gains from criminal activities.
Follow the money’’, was the advice of ``Deep Throat’’, the key informant
of the Washington Post reporter investigating the Watergate scandal. This,
too, is the philosophy adopted by the Financial Intelligence Centre Bill.
[Interjections.]
Is that hon member listening? I can hear what he is saying.
[Interjections.] Thank you.
However, money-laundering and the legislation introduced today takes on a new meaning in the wake of the post September 11 attacks on the United States and the events unfolding in the Middle East. No longer can money- laundering be understood only as hiding and moving the proceeds of unlawful activity, such as drug trafficking, but it must include those funds which are intended for terrorist activity as well.
What are the estimates of money-laundering? Owing to the secretive and the disguised nature of laundered funds, the worldwide value is not precisely known. Michel Camdessus, the former managing director of the International Monetary Fund, has estimated that the magnitude of money laundered globally annually is equivalent to 3% to 5% of the world’s gross domestic product, or at least some US$ 600 billion. Using 1996 statistics, the value of money laundered ranged between US$ 590 billion to US$ 1,5 trillion. The lower figure represents the nominal total output of an economy the size of Spain. The Financial Action Task Force estimates the value of global money- laundering at around US$ 300 billion to US$ 500 billion.
South Africa is no exception. Although there is no conclusive study and the opinions vary, we understand that anything between 2 US$ billion and 8 US$ billion is laundered through South African institutions every year. We need to understand what the money-launderers already do. We live in a globalised village in which national borders are easily crossed, increasingly by almost instantaneous electronic means, by individuals and criminal organisations who wish to move money around the globe to avoid scrutiny.
The problem with money-laundering is that it has a corrosive effect on the country’s economy, its government and its social wellbeing. The practice of money-laundering distorts business decisions, increases the risk of bank failures and creates liquidity problems in financial markets. Owing to the quick flow of laundered or hot money, it takes control of economic policy away from Government, making policy objectives difficult to achieve. It harms the country’s reputation and exposes its people to crime syndicates, drug trafficking, smuggling and other criminal activities.
Owing to increased activities by authorities in developed nations, crime syndicates are shifting their activities to emerging markets which are perceived to be not well regulated. Emerging markets that are in the process of opening their markets or liberalising, are especially susceptible.
The cumulative effect of laundering activities destabilises the foundations of a nation’s financial system. Money-laundering diminishes tax revenue to the fiscus and thereby indirectly harms honest taxpayers. It makes Government’s tax collection procedures far more difficult. The loss of untaxed revenue generally means higher tax rates for law-abiding citizens and corporates than would be the case if the untaxed proceeds of crime were legitimate. With this Bill therefore we intend to interrupt the cycle used by organised criminal groups to benefit from illegitimate profits. We shall use the Bill to maintain the integrity of the South African financial system we have struggled so hard to build.
We know that money-laundering is undoubtedly taking place in South Africa, because we have organised criminal groups who need to rid themselves of money they have obtained illegally from the sale of drugs and bank heists. We also have a well-developed financial system through which the funds can be processed. To date, however, there have been few prosecutions for money- laundering activities, and part of the reason is that these have been difficult to monitor and trace. We have not had the regulatory means at our disposal to measure more accurately the amounts of money which move through our institutions, but things are changing.
The object of this Bill is to introduce mechanisms and measures aimed at preventing and combating money-laundering activities. It sets up an antimoney-laundering regime which encourages voluntary compliance and self- regulation by institutions which otherwise may have been exploited for money-laundering purposes. To this extent, the Bill complements and works with the Prevention of Organised Crime Act.
The Bill establishes a Financial Intelligence Centre which will co-ordinate policy and Government’s efforts to counter money-laundering activities. In terms of section 195 of the Consitution the centre will be located outside the Public Service but within administration. It will be accountable to the Minister of Finance and will be funded mainly from the national Budget.
The centre will bring together all financial intelligence data into one single repository for analysis before passing this information on to the law enforcement agencies for further investigation and prosecution. It will be headed by a director who will be the accounting officer in terms of the Public Finance Management Act, and will be independently staffed with specialists, including secondees from various law enforcement agencies and the SA Revenue Service.
The Bill creates a new legal category of accountable and reporting institutions, which refer to the companies and businesses which we consider to be the most vulnerable to money-laundering activities. It sets out a range of obligations on these institutions. They will be required to implement internal administrative systems to ensure that they know their customers, report suspicious and certain cash transactions, keep records of their customers and the transactions they were involved in, appoint compliance officers and train employees to comply with the provisions of the Bill.
Implementing these measures will, of course, prove costly for some institutions. But we believe that we have the support of South African institutions in stamping out money-laundering in South Africa and that they will tackle the difficult task of having to comply with these provisions in the spirit intended by the Bill. This Bill has long been in the making, and, most importantly, we are creating a climate of compliance. The time has come when institutions can no longer evade their legal and moral responsibilities in respect of people who use their services for criminal financial activities. The Bill will help bring oversights to an end, and the Government intends enforcing it to the letter.
While on this matter, I need to point out that in Chapter 5 of the Bill a range of offences are identified and very onerous penalties imposed in the event of transgressions by accountable institutions. The offences include the failure to identify clients, not keeping records for a period of five years, and not reporting cash transactions, suspicious or unusual transactions. A person found guilty of any of these offences is liable to imprisonment for a period not exceeding 15 years or a fine not exceeding R10 million. I am sure that in the near future these will be known as the Johnny de Lange clauses. The Bill sends out a very clear message: We are serious about implementing an antimoney-laundering regime in this country. The Deputy Minister will talk about some of the provisions and implementations of the Bill in more detail. However, I need to point out that the National Treasury has dedicated capacity to ensuring that the FIC is established as soon as possible. A process is already under way to draft the regulations according to the sequence in which different parts of the Bill will be enacted. It is anticipated that the first phase will be from June next year, when banks will be required to know their clients and to start reporting suspicious and unusual transactions. Full implementation will be completed three years hence, once an electronic transaction reporting institution has been phased in.
In summarising, I wish to reiterate that the legislation before members today is amongst the most comprehensive antimoney-laundering measures anywhere in the world. It draws on international best practice and gives South Africa the means to combat all manner of money-laundering activity. We are serious about identifying those who are involved in this activity and in bringing them to book.
In conclusion, I wish to thank all those who have been involved in this process, the Task Team into Money-laundering, the chairperson, Mr Max Coleman, Mr Mark Phillips and Mr Pieter Smit, who have stuck with this task through the years. We welcome the vigorous and intense debate that the passage of this Bill has generated.
I wish to thank all those institutions and individuals who made the effort to present their views to the portfolio committees during the public hearings. Their views have, where possible, been taken into account. A number of international bodies have been of major assistance. I wish to single out the Australian High Commission and Austrac for special thanks.
I especially want to thank the Portfolio Committees on Justice and of Finance for the many hours of work they have put in, but also, more importantly, the chairpersons of these committees, Barbara Hogan and Johnny de Lange, for the manner in which they have so diligently applied their minds and kept this task on track.
I have pleasure in placing before this House the Financial Intelligence Centre Bill.
Ms B A HOGAN: Madam Speaker, the Bill before us is a product, I believe, of how Parliament should operate. Two committees met to deliberate on this Bill, each bringing their two areas of expertise to bear upon it. A vigorous debate ensued, and we believe that the outcome of those deliberations has contributed to an already very good Bill.
The Financial Intelligence Centre Bill is devoted to combating money- laundering. In the old days one used to believe that one could combat crime by prosecuting the crime itself, that is, finding the crime, identifying the criminal and prosecuting the crime. We have learnt, much to our regret, that that is insufficient these days. Nowadays we have a battery of instruments at our disposal in order to deal with crime. The forfeiture of the proceeds of crime is already present and is alive and well in South Africa. Finally, the money-laundering Bill that is now before us will help us to follow the money that is funding criminal activities and the money which criminals make out of pursuing their illegal activities.
I want one to think for a moment about the drug lord - I have never heard of the term ``drug lady’’, I do not believe women get involved in such activities … [Laughter.] [Interjections.] … I will not engender this Bill, but let us talk about the drug lord.
The MINISTER OF EDUCATION: What about Mata Hari?
Ms B A HOGAN: It was a long time ago - we have improved since then.
The drug lord is in Hillbrow, the Cape Flats or Soweto is receiving illicit money for drugs received, and so he sits with a bagful of money. What is he going to do with it? If he puts it in the bank, sooner or later the SARS will start asking questions about the origin of that money. He can spend it on a flashy car, but that is limited, and the more money he gets, the more limitations there are. He can try and buy a house, which up to now has been possible.
But, finally, if one has to think about it, besides the purchasing of luxury goods, a criminal also wants to take that money and invest and grow it, and use it for more investment in criminal activities. What is that criminal going to do? Firstly, that criminal will go about taking the small denomination bills that he gets and putting them through the first round of laundering that money, that is, making dirty money clean.
The criminal does this, for instance, by going into a casino, buying chips and gambling just a little bit, and then getting the casino to issue a cheque, which he or she takes and puts in his or her bank. It is very difficult to trace the origins of that money. That criminal then goes and probably buys a car wash, deposits money in excess of what he earns on that car wash, and gets some money through the system. That is the first round of money-laundering. But this is just a small-time criminal. Now we move on to the big-time criminal.
The big-time criminal now has that money in the banking system. He or she starts using a set of complex financial transactions to move this money around and - this is now getting sophisticated. For instance, let us say ``Operation Cassanova’’ in the US found drug money laundered by an illegal drug trafficker. He or she wired these funds to a bank account in another country outside the USA. Investigators then tried to get the government of that country to assist them. When that government agreed to help them, it was found that that bank holding company was not even in that country, but in another country. When they got to that country, they discovered that that bank did not have a building. They could not seize the assets of that bank, because it was virtually a fax and telephone. So the money gets placed through a whole set of complex financial transactions which are very difficult to trace, and finally comes back as clean money.
With regard to a loan bank agreement, the criminal takes the money and places it in an offshore account in an unregulated country. He or she then takes a loan on that money and brings it back into the country, having become perfectly legitimate money.
This is precisely what the Financial Intelligence Centre Bill is intended to address. The Financial Intelligence Centre Bill is there to trace the movements of money that is moving through the layering system and the placement system in their complex range of financial transactions. In that way, one would be able to discern criminal activity, one would be able to find the criminals in the system, and, very, very importantly, one would be able to curb any money-laundering activity, because in certain circumstances the money being laundered, particularly in small developing countries, often exceeds the budget of the particular country in which these criminals are operating. We are talking about countries like Colombia, for instance.
The integrity of the entire financial system of a country is fundamentally undermined by money-laundering. Of course, we are not only talking about drug dealing, but also about bribery, counterfeiting, drug trafficking, espionage, extortion, fraud, murder, kidnapping and terrorism - the whole gamut of racketeering activities that this Bill is designed to address.
Let us also not forget the political lords who have used money-laundering very effectively. Gen Sani Abacha of Nigeria is reckoned to have laundered nearly R1,3 billion through UK banks, and Slobodan Milosevic, an incredible R2,9 billion through banks in Greece, Cyprus and Switzerland. Let us not forget that money-laundering plays into very, very sinister motives.
The speakers that are going to follow me will speak comprehensively on the provisions of this Bill. Let me just make a couple of comments though. A centre is being set up to which most financial institutions, including banks, estate agents and gambling boards, will have to report suspicious transactions and transactions that exceed a certain cash amount. The Financial Intelligence Centre will then analyse the information coming to it and make it available to an array of investigating forces, including the National Intelligence Services, the National Directorate of Public Prosecutions, the Police and the SA Revenue Service. These different units will have to co-operate and decide who will follow which trail, and who will follow which case. That is going to need a lot of diplomacy and a dedicated team of people who are not worried about protecting their turf, but who regard catching the criminal as very important.
Secondly, the institutions will have to report, and they are going to be placed under enormous pressure to make sure that they are reporting and complying with the reporting requirements. The financial services regulator in the United Kingdom reported last year that he was really concerned that the banks were still underreporting to a significant degree in the United Kingdom. The compliance requirements under this Act are very stringent; they are the De Lange requirements and they are very, very strict.
However, it is encouraging that the industry has already started having meetings. It has, in fact, anticipated government policy and has already implemented rules and regulations related to money-laundering. But, certainly, the regulators that regulate these industries - the Estate Agents Board, the Gambling Board, the SA Reserve Bank, the Financial Service Board, etc - are going to have to play a pivotal role in education and in ensuring compliance. [Applause.]
Finally, I would like to thank the justice portfolio committee and its members, particularly the chair, Mr Johnny de Lange, for the hard work that they put into this Bill. It has been the most rewarding experience. [Applause.]
Mr K M ANDREW: Madam Speaker, it is a pleasure to follow on the chairperson of our committee, Ms Hogan, and I must say that I certainly bow to her superior knowledge when it comes to knowing how to launder money. I was also making a short list of members who were making notes while she was speaking and I will provide that to the Minister in due course.
There is probably only one particular aspect about this Bill that really does concern me, and I perhaps need to go back and read it again, and that is that I agreed with everything that the Minister said in his speech, which hon members can understand will certainly give me cause for concern.
Globalisation, together with the Internet, has provided more opportunities for criminals to commit crimes, using electronic communication, commerce and banking, and, in addition, to conceal the origins of the monetary proceeds of those crimes. Money-laundering, in essence, is the converging or transferring of the proceeds of unlawful activity in a manner which conceals its origins. It is a major international problem which is growing. It is estimated to involve hundreds of billions and, possibly, trillions of US dollars each year and South Africa is no exception to this trend.
The Bill establishes a Financial Intelligence Centre which will assist in the identification of the proceeds of unlawful activities and the combating of money-laundering activities. The centre itself will not enforce the laws, but it will gather information from the private and public sectors and disseminate it to the appropriate law enforcement agencies.
The Bill places heavy responsibilities on various accountable institutions, such as banks, foreign exchange dealers and stock exchanges by requiring them to know their clients and to report all suspicious and unusual transactions. As the Bill is complex, tens of hours were spent in joint finance and justice portfolio committee meetings, and a large number of amendments have been made to the Bill which was originally tabled.
This afternoon I would like to pay tribute to the two chairpersons, the hon members Barbara Hogan and Johnny de Lange, for the thorough and orderly manner in which they conducted the proceedings, and I think the product of those proceedings is a tribute to the work of the committees as well as the leadership provided by the chairpersons.
I would also like to pay tribute to Mr Mark Phillips, who is a special consultant to Mr Pieter Smit in the office of the National Director of Public Prosecutions and to Mr Chris Malan from the National Treasury, all of whom played a very important role in assisting the committee to produce a Bill that we were comfortable to recommend to the National Assembly.
We did face challenges. One was to provide for flexibility to be able to cope with rapidly changing circumstances and technology and, also to make the Bill practical in respect of bodies as diverse as casinos, banks and estate agencies. To do this, the Bill gives the Minister powers to regulate, but with a requirement which differs, depending on the subject matter of the particular regulation, in that the Minister either obtains parliamentary approval in advance or, in some cases, simply formally tables the regulation in Parliament.
There is a danger contained in the Bill in that it provides for abnormal invasions of privacy in respect of financial dealings. However, there was no way in which one could achieve the objectives of the Bill, yet avoid that invasion of privacy in respect of financial dealings.
The committee has tried to minimise any unfair adverse consequences of this invasion of privacy by ensuring that there are stringent confidentiality provisions. Despite the onerous responsibilities placed on accountable institutions, the Bill was supported by the financial services industry, and no objections were received suggesting that the costs of compliance would be unreasonably high.
The DA hopes that this Bill will help to counter money-laundering and related criminal activity. We shall be supporting the Bill. [Applause.]
Mr H J BEKKER: Madam Speaker, the Financial Intelligence Centre Bill is probably the most scrutinised piece of legislation ever debated in this Chamber. The end result is a joint effort of the portfolio committees of Justice and Finance.
Many joint meetings, over several months, have taken place, and I can assure members that this was a thorough process. The joint chairpersons and all the members should be congratulated for their dedication and hard work in this regard.
Mrs S A SEATON: Madam Speaker, on a point of order: That hon member is not Mr Bakker from the New NP, but Mr Bekker from the IFP.
The SPEAKER: My apologies. I thought I had said Bekker. [Interjections.] I am glad your Whip is calling you to order, Mr Bekker. [Laughter.]
Mr H J BEKKER: Madam Speaker, I have since been called to order by my own Whip, and the monitor set is expanding and giving the information. Let us go rather on the Bekker formula than on the Bakker formula. [Laughter.]
This legislation focuses on money-laundering and the proceeds of crime and drugs. The shifting of monies used to purchase weapons and to finance terrorism is also applicable. Members will agree that after that terrible Tuesday of 11 September nothing will be the same again. Even a well-known and reputable South African bank has been identified as providing, unwittingly, a correspondence agency for a Saudi bank that is being controlled by Osama Bin Laden.
South Africa, as an international player, must play its role in stemming the tide of money-laundering. And in order to achieve these objectives, a Financial Intelligence Centre is to be established. This institution will fall outside the ambit of the Public Service, but will still function in terms of public administration, as envisaged by the Constitution.
This centre will collect information on suspected proceeds of possible unlawful activities, and in order to combat money-laundering activities, this information, which will be collected by the centre, will then be passed on to the investigating authorities, the intelligence services and the SA Revenue Service to facilitate the enforcement of the laws of the Republic. A great deal of power or even excessive power is being granted to the centre in order for it to trace the source of money and the flow thereof.
Let me now deal with money-laundering law enforcement and ways of following the money. In order to solve a crime, one must follow the money. A three- pronged approach to fighting crime is necessary: prosecute the underlying crime, follow the money trail through money-laundering investigations, and then forfeiture of the proceeds and instruments of the crime. Only by following the money can the scope of a crime be discovered and a criminal organisation be destroyed.
Since 1986, money-laundering has increasingly become a global problem involving international financial transactions, the smuggling of currency across borders and the laundering in one country of the proceeds of crimes committed in another country. Currency, monetary instruments and electronic funds flow easily across international borders, allowing criminals in foreign countries to hide their money in one state and enabling criminals in that country to conceal their ill-gotten gains in any one of hundreds of other countries around the world, with little concern that their activities will be detected by law enforcement agencies.
The basic problem for many money-launderers, and especially those who launder the proceeds of illegal drug activities, remain the same: concealing and moving the enormous amounts of illicit cash. For this reason, even in the international context, the United States government’s primary area of emphasis has been the placement stage of money-laundering, the stage at which the money-launderer first seeks to enter illicit proceeds into the financial system.
South Africa has received assistance and training from the US in this regard, and we are highly regarded for our effort to stem the tide of money- laundering. The chief of the international training of the FBI, Mr Judson M Ray, made the following remarks about South Africa:
History has shown that when there is a major change in a governmental structure, crime becomes rampant. The Republic of South Africa is no different.
The crime problem in the RSA is serious and complex. In the wake of the change of government from the apartheid system and the years of sanctions preceding democratic elections, the RSA has had to cope with increasing crime. There is evidence that organised crime syndicates have established a formidable presence. Police officers are murdered at a rate higher than those in any other country in the world.
In conclusion, Mr Ray made the following observations:
South Africa continues to suffer a severe crime problem. Violent crime, organised crime, narcotics trafficking, armed assaults, murders, gun smuggling, vehicle theft, gang-related activity, money-laundering, fraud and official corruption are just some of the interwoven and overlapping afflictions confronting South Africa. The criminal justice system is not functioning well enough to combat the crime problem effectively.
To defeat international money-launderers it is imperative that the nations of the world work together to exchange information and provide co-operation in investigations and asset forfeiture cases.
It is the policy of the US, pursuant to statutory authority, to share the proceeds of successful forfeiture actions with countries that made it possible or substantially facilitated the forfeiture of assets under United States law. This process of sharing these proceeds will now also be applicable in South Africa.
In July 2000 the US department of justice, with the concurrence of the US Secretary of State, transferred approximately US$170 million to 26 countries in recognition of their forfeiture assistance. Asset sharing among countries enhances international forfeiture co-operation by creating an incentive for countries to work together, regardless of where the assets are located or which jurisdiction will ultimately enforce the forfeiture order. The most important issue is to take the criminal proceeds away from the criminals.
A complete strategy against drug trafficking and organised criminal activity must focus on the financial aspect of the criminal activity. In order to accomplish this, there must be a comprehensive set of laws that criminalise money-laundering, provide for asset seizure and forfeiture and facilitate international co-operation.
In addition, a full range of regulatory measures, such as comprehensive bank supervision and a system of reporting of suspicious activity, are necessary to deter and detect money. Only by working together on the interagency and international levels will we be able to stem the flow of criminal proceeds and criminal organisations in South Africa.
This Bill is long overdue, and on behalf of the IFP I have pleasure in supporting the Bill. [Applause.]
Mrs R R JOEMAT: Madam Speaker and hon members, the Financial Intelligence Centre Bill deals with the combating of money-laundering activities.
In the publication The Economist there was an illustrative cartoon. The first picture showed a criminal with two bags of money at the counter of a laundry. Then the money goes through a washing machine and a wringer, and then the bills go onto a washing line with dollars pegged, all hanging on the washing line. Eventually these dollars end up on an ironing board which is covered with a world map, which then shows how the money goes back into circulation all clean and legal. This is exactly what money-laundering is about: the cleaning of dirty money.
This Bill complements the objective of our ANC-led Government, ie to combat crime and corruption, and it also complements the Prevention of Organised Crime Act. After the recent tragic event that took place in the United States on 11 September, a number of governments are calling for a rapid and co-ordinated effort to detect and prevent the misuse of the world financial systems by terrorists. The European Union finance and economic ministries and the G7 finance ministers have suggested that such an initiative be pursued in the framework of measures already taken by the international community to combat money-laundering.
The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money-laundering is the processing of the criminal proceeds to disguise their illegal origin. This process is of critical importance as it enables the criminal to enjoy these profits without jeopardising their source.
When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising their sources, changing the form or moving the funds to a place where they are less likely to attract attention. The International Monitory Fund estimated the global volume of laundered money at 2% to 5% of global GDP annually. This is between US$600 billion and US$1,5 trillion.
The effects of money-laundering on the economy has far-reaching consequences - it makes crime pay. It allows drug traffickers, smugglers and other criminals to expand their operations. This drives up the cost of law enforcement and health care, such as the cost of treatment of drug addiction. It has the potential to undermine the financial community because of the sheer magnitude of the sums involved. The potential for corruption increases with the vast amounts of illegally obtained money in circulation. Money-laundering diminishes Government tax revenue and therefore indirectly harms honest taxpayers and reduces legitimate job opportunities.
This Bill will address - and we hope that it goes far enough - illegal activities in money-laundering. The setting up of the centre as outlined in the Bill will drive the process. The operation of oversight and accountability of the centre will be located outside the Public Service but within the public administration in terms of section 19 of the Constitution, and will be accountable to the Minister of Finance.
The principal function of the centre is to collect, process, analyse and interpret information of the proceeds arising out of unlawful activities and the combating of money-laundering activities. The centre must also make information collected by it available to the investigation authorities, the intelligence service and the SA Revenue Service to facilitate the administration and the enforcement of the law of the Republic.
We must not underestimate the creativity of money-launderers. The new type
of money-laundering has what we call foot soldiers'' known as smurfs’’
who carry cash around the country, making smaller deposits that do not have
to be reported. Certain countries avoid setting thresholds and merely
specify that suspect transactions be reported. And now with electronic
banking it makes the task more difficult to monitor.
Spotting those suspicious transactions in the immense flow of funds is not easy, and computer software will have to be installed or updated to assist this process. The Financial Intelligence Centre and the Money-Laundering Advisory Council will rely on the accountable institutions to be vigilant and detect any suspicious transactions.
Failure by the accountable institutions to identify persons or to keep records and destroying or tampering with records; failure to co-operate with the centre or to send reports to the centre; and failure to report suspicious or unusual transactions will be an offence and shall be treated as a contravention of this Bill, and will be penalised as outlined in section 70 of the Bill.
Therefore, if hon Mr Goniwe - I see he is not in the House now - goes to his bank and deposits R50 000, he should immediately be detected as suspicious, because no parliamentarian makes such deposits. [Laughter.] Knowing one’s client will assist the accountable institutions to detect fraudulent transactions.
The centre will be funded by money appropriated annually by Parliament. Any Government grants and any other legally acquired funds must have prior approval by the Minister of Finance.
The ANC supports this Bill. [Applause.]
Dr P J RABIE: Madam Speaker, hon Minister and hon members, this Bill provides for the establishment of a Financial Intelligence Centre which will illuminate the proceeds of unlawful and suspicious financial activities and for the combating of money-laundering activities, which has regrettably escalated to levels of alarming concern. One of the aims of this Financial Intelligence Centre Bill will be to collect information from all respective role-players in the private and the public sectors, as well as liaising with representative law-enforcement agencies.
This is a very technical and complex piece of legislation. The justice and finance committees of Parliament spent hours on this Bill and a large number of amendments were made to see fit our particular needs in South Africa. A significant characteristic of this Bill is that any institution is accountable and must report suspicious deals within a prescribed period of time. The grounds for suspicion must also be clearly stipulated.
The same principles also relate to the electronic transfers of money to and from South Africa. The South African financial sector is becoming an integral component of the global economic order which requires accepted international business ethics. I am proud to say that this particular institution will definitely foster our acceptance into the international global economic order.
The Financial Intelligence Centre Bill stipulates in no uncertain terms that it is the responsibility of all accountable institutions to comply with this Act. The list of accountable institutions vary from attorneys, estate agents, banks, long-term insurance institutions, legal gambling licensers, foreign exchange dealers, stock brokers and stock exchanges.
During the hours of deliberations regarding this Bill it was very clear that the respective sectors of the financial community thought that this particular Bill was very much needed, and I am proud to say that the DA supports this Bill. Money-laundering has become a very sophisticated activity. The severe penalties that are imposed by this Bill are welcomed. I am referring to the 15 years’ imprisonment or R10 million fine for offences committed by transgressors.
Further, I would like to say that some aspects of this Bill can be viewed as controversial as far as it relates to the invasion of privacy regarding suspicious or questionable financial transactions. Clause 70 of this Bill specifies the procedure to be followed regarding search, seizure and forfeiture when there exist reasonable grounds for interference by the Financial Intelligence Centre.
Something else which is very important about this Bill is that clause 54 stipulates exactly when a particular offence has been committed and when there is a possibility of a seizure and forfeiture of assets. I would like to further point out that this Bill is very much in line with what has been stipulated in the Nel commission which did some research into the dealings relating to the Masterbond saga. What is alarming is that our current legislation is rather inadequate, according to Judge Nel - and I agree with him - regarding highly sophisticated white-collar crime and money- laundering activities. I think that this centre and this piece of legislation will definitely fill the void that exists at present.
Something else which I think is very important about this Bill is that it transcends narrow political grounds, and I think all responsible South Africans will welcome it.
Dr G W KOORNHOF: Chairperson and hon members, the tragic events in the USA on 11 September this year has changed the world for ever. The deeds committed on that day have focused the attention of the world on how it is possible for terrorists and criminals to manipulate illegally or legally acquired wealth and its conversion into legitimate funds. We in South Africa should therefore be eager to fully enact this Bill as soon as possible.
The aim of this Bill is to prevent, combat and to monitor money-laundering. Money-laundering is defined as a process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities. Generally speaking, money-laundering involves three distinct segments, and the Minister of Finance has referred to them.
These are, firstly, the placement of illegally obtained proceeds, often hard currency, into the financial system through banks or other financial institutions; secondly, layering in which the launderer triggers a series of complex secondary transactions designed to separate the proceeds of criminal activities further from the original source of the funds; and, thirdly, in which integration, the laundered proceeds are distributed back to the criminal for a number of purposes. Such laundered proceeds are often used to purchase luxury goods and to invest in legitimate enterprises.
It is, therefore, clear that money-laundering is a complex and a very serious problem, not only in our country, but also in the world. It is estimated that the extent of money-laundering in South Africa amounts to approximately $2 billion to $20 billion per year. To prevent and to combat this crime effectively, we need hard-hitting and far-reaching legislation.
The Bill proposes a wide range of obligations on accountable institutions, including attorneys, banks, estate agents, investment brokers, long-term insurance brokers and foreign exchange dealers. Such institutions, for example, have to establish the identity of their clients, keep proper records and report cash transactions and suspicious transactions.
The Bill provides, quite correctly, for a variety of possible offences. The penalties, in most instances, are very severe. What we now need in South Africa is the following … [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Carry on, hon member.
Dr G W KOORNHOF: Firstly, we need full enactment and the electronic reporting of this Bill as soon as possible. Secondly, we need the accountable institutions and companies to make compliance with this Bill part of their business operations. Thirdly, we need greater awareness of this problem amongst all role-players. Fourthly, we need the channelling of more resources to law-enforcement agencies. Fifthly, we need the closing of loopholes, and, lastly, a steep rise in convictions for money-laundering.
We believe that the establishment of the Financial Intelligence Centre and the advisory council are the first important steps to make South Africa a creditworthy role-player in the world in the fight against money- laundering. This will be money well spent: to prevent and combat this crime. We are proud to support the Financial Intelligence Centre Bill. [Applause.]
The DEPUTY MINISTER OF FINANCE: Mr Chairperson, hon members, the Financial Intelligence Centre Bill, tabled before the House today, establishes the Financial Intelligence Centre and the Money Laundering Advisory Council and creates new legal categories of accountable institutions and reporting institutions. The Bill places a number of obligations on accountable institutions based on the ``know your customer’’ principle and reporting procedures.
The Minister has provided the House with a broad context within which the Bill is being introduced. I shall touch briefly on some of the details of the Bill and how the National Treasury envisages the implementation of the Bill. [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! hon members!
The DEPUTY MINISTER: The Financial Intelligence Centre will act as a central repository of information on money-laundering activities. The Financial Intelligence Centre is being established for financial intelligence gathering and analysis. It will receive reports from accountable institutions, process, analyse and interpret the data before passing this information over to the law enforcement agencies which, in turn, will use the information for further investigation and, ultimately, prosecution. It must be emphasised that the FIC is not an investigative body. The function of investigating suspected criminal activity will remain with those authorities that are tasked with this function under the Constitution.
Therefore high on the FIC’s agenda will be the development of close relationships with the different law enforcement agencies. The FIC will work closely with the SA Police Service and its specialised units to assist it in investigating allegations of money-laundering. It will work closely with the National Prosecuting Authority and the Scorpions, in which case the assets identified as being the results of laundering and unlawful activities will be under threat of seizure.
It will work closely with the SA Revenue Service to help stamp out tax evasion. It will also work closely with the supervisory bodies, particularly the SA Reserve Bank and the Financial Services Board, which jointly have a responsibility to ensure compliance by banks, mutual banks, other deposit-taking institutions and licensed financial services companies, as accountable institutions.
More importantly - and here we have gained from international experience - the FIC will also create a feedback loop so that there can be a process of regularly informing accountable institutions on laundering activities and trends, as well as successful investigations and prosecutions. It is important to the principle of a public - private partnership combating money-laundering activities, as entrenched in the Bill - which I will deal with later - that there is as much dialogue as possible on the effectiveness and efficiency of the compliance measures imposed under the Bill.
The FIC will be headed by an appropriately qualified director. A relatively small staff complement is intended, which will be made up of a full-time corps with others drawn by way of secondment from other Government departments, such as the SA Police Service, the National Prosecuting Authority and the SA Revenue Service. Others will be recruited for their specialised skills, their proven ability for analysing financial data, and forensic work, or their legal and investigative skills. This will promote a co-operative endeavour to combat money-laundering which is in line with best practice elsewhere in the world.
Central to the proper functioning of the FIC will be the IT systems it utilises. These will need to enable the centre to receive reports from accountable institutions and for it to develop databases of stored information. Over time, large volumes of data will need to be sifted through and analysed for names, links and networking patterns. This information will then be fed through to the investigating agencies for them to carry out further investigation and prosecute offenders.
These IT systems will require careful scoping in the months ahead. The FIC will want to avoid reinventing the wheel by refraining from spending hugely on development costs when proven software has already been developed for this kind of work. Therefore the National Treasury is already in discussion in this regard with other financial intelligence units.
The battle against organised crime and money-laundering cannot be won by Government and public bodies alone. To be effective, antimoney-laundering policy requires a partnership between the Government, the private sector, and supervisory and regulatory bodies which operate in the financial sector.
This partnership is given practical expression in the Bill through the establishment of a Money-Laundering Advisory Council. The council will facilitate public-private co-operation, and will advise on the development of appropriate antimoney-laundering policies. Although the council will not have any executive or regulatory powers, it will be necessary for the Minister to consult with it before issuing regulations or exempting any accountable institutions from the provisions of the Act.
The Financial Intelligence Centre Bill places a number of obligations on a list of accountable institutions. Accountable institutions and reporting institutions are those companies and businesses which we consider to be most susceptible to money-laundering activities. These include banks, life assurance companies, foreign exchange dealers, casinos and even estate agents. These institutions will be required to implement internal administrative systems to ensure that they know their customers, report suspicious and certain cash transactions, keep records of their customers and the transactions that they were involved in, appoint compliance officers and train employees to comply with the provisions of the Bill. The ``know-your-client’’ principle, which is reflected in these sections, together with the record-keeping and reporting requirements of the Bill, is central to any anti-money-laundering regimes worldwide.
We are aware that the accountable institutions run their operations in sectors which are different from one another. Some sectors are more susceptible to money-laundering than others. Some will find some of the provisions of the Bill more costly to comply with than others. In some cases, it will be appropriate to exempt some accountable institutions from some of the obligations contained in the Bill. For this reason, the Bill permits the maximum possible flexibility in its application to accountable institutions. I envisage that through a process of exemptions and the drafting of regulations relevant to each sector governed by the provisions of the Act, an appropriate, comprehensive and cost-efficient antimoney- laundering regime will be put in place.
The National Treasury has already assembled a regulations-drafting team, duly assisted by a drafter from the Asset Forfeiture Unit, which has the brief of providing the finer details of the Bill. Treasury is committed to continuing ongoing consultation with representatives of accountable institutions and supervisory and regulatory bodies to ensure that the exemptions and regulations which will be promulgated in future are appropriate to their respective industries.
We also intend drafting the regulations in the sequence that we expect the legislation to be enacted. Therefore those regulations dealing with customer identification and record-keeping requirements will be prepared first, followed by the requirements for reporting information. The Bill makes it possible for these regulations to be implemented only after consultation with the Centre and the Money-Laundering Advisory Council. Therefore these two bodies will be established as soon as possible.
The Bill also creates a category of reporting institutions. These institutions, which at this stage only comprise dealers in motor vehicles and Kruger rands, will be required to report suspicious and certain cash transactions, but they will not be required to comply with all of the other obligations imposed on accountable institutions.
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon Deputy Minister, I am afraid your speaking time has expired.
The DEPUTY MINISTER: I am confident that the Bill achieves all of these things without making unnecessary or inappropriate demands on the country’s resources. [Applause.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! The hon Ms L A Mabe will be making her maiden speech. [Applause.]
Ms L MABE: Mr Chairperson, as a South African woman, I am proud and grateful to stand here today as an ANC member of Parliament. I pledge that I will not forget where South Africa comes from and the tortuous journey we travelled to achieve freedom and democracy.
Those who have not travelled this journey cannot comprehend the need to defend and deepen our democracy, and to jealously guard against all types of counter revolutionary actions. And we must also acknowledge our past, change the present and build the future.
Today I am reminded of my late father, whose life was taken near Jeppe Hostel in Johannesburg in the early 1990s, at the time when the apartheid system fought fiercely to distract the attention of the liberation movements away from the light of freedom that was shining on the horizon. He believed that, regardless of my age and gender, I had a right to freedom; that is freedom of conscience, religion, thought, belief and opinion. I miss those debates around the Sophiatown activities and events in the context of the current political situation.
Our martyrs, such as O R Tambo, Lillian Ngoyi, Chris Hani, Sol Plaatje and others, stand out like a crowd of witnesses urging us all to march forward with greater speed and purpose in South Africa. Our democracy has ushered South Africa into the global economic market. It has exposed it to international organised crime which always flourishes in new democracies.
Since coming to power in 1994, the ANC-led Government has targeted violent crime as a priority to ensure that our courts have the power to deal ruthlessly with the complex patterns of criminal behaviour. This Bill is part of that process.
Money-laundering is an international problem, which is not confined to South Africa alone. There is a complex behaviour of criminal activities in relation to money-laundering. And this Bill is a result of the collaboration between the Ministries of Finance and Justice and key Government departments. It has been looked at with interest by other governments all over the world.
Under the apartheid government the legal system did not keep pace with international developments in combating crime. The Government focused its attention on criminalising the actions of those who were committed to the struggle for democratic rights. Today we as the ANC-led Government are faced with the challenge of addressing this short-sightedness.
The purpose of establishing the Financial Intelligence Centre is to provide information and intelligence that will enable the Government to fight against money-laundering. That information will help those who are dedicated to the eradication of organised crime in order to smoke out international syndicates which are using this country to launder money under the pretext of not doing anything which is against the law.
We are seeking to make remarkable progress in dealing with the scourge of criminality. We have seen the success of our special units which are dedicated to fighting crime, hijacking, urban terror and gang-related violence. Our Government realises that we cannot fight these massive problems of crime using unco-ordinated and ad hoc measures. There are those prophets of doom who say that we must bring back the death penalty, and all will be well. What an unfortunate situation! Their cries are hollow, for in their hearts they know very well that this is not a solution to the problem crime that is ravaging the whole world. A hang-them-high approach might make good politics, but it makes bad governance. Our challenge is to fight crime on all fronts by establishing a sound legislative framework to enable us to catch criminals, to secure convictions and to impose appropriately heavy sentences which support a well-trained and reserved criminal justice system.
The fight against crime is not simply the job of the police and the courts. It is the job of all sectors of society, and this Bill is an example. This Bill creates the framework and facilitates for co-operation between the financial sector and Government for the sharing of information that will allow us to nail those criminals and hang them, without using the rape which was used in the past.
It will compel business to go into deals with their eyes open and to ask questions if people come with bags of cash wanting to make investment, for example, by purchasing a piece of property. It will allow a channel for people who are suspicious of their clients’ identities or sources of their funding to voice their suspicions with confidentiality, confident that their contents will be addressed appropriately.
This is a good piece of legislation, especially because it is new in this country. It is the result of extensive refinement and consultation. The Bill itself is straightforward and easy to understand, even to the ordinary person in the street. And I must compliment the drafters of this Bill for its accessibility to the public.
I consider it a great honour, as a new member of this House and a new member of the Portfolio Committee on Justice and Constitutional Development, to have been afforded this opportunity to participate in the debate about this ground-breaking piece of legislation which will be another powerful weapon in our arsenal which we use to fight crime. By supporting this Bill we are taking the fight to the criminals, drug dealers, gangsters - wherever they are syndicates, hijackers, bank robbers. Their time has expired. They will be forced to oblige, whether they like it or not. [Applause.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, in the visitors, gallery we have the honourable Mr Li Qiyan who is the deputy minister for labour and social security in China. He is visiting with his delegation. [Applause.] The delegation is here in order to further strengthen trade and other relations between South Africa and China. On behalf of the Parliament of the Republic of South Africa, we welcome the delegation to South Africa and to our Parliament. [Applause.]
Mr S N SWART: Mr Chairperson, hon Minister, may I also bring an element of justice from the Portfolio Committee on Justice and Constitutional Development to this debate.
It is undeniable that South Africa has fallen behind international best practices in its attempts to combat money-laundering. Whilst the need for this encompassing legislation has existed for some time, the events of 11 September in America have emphasised the urgent need for the legislation, notwithstanding its invasion of privacy.
This Bill should send a clear signal to those who would abuse the worldwide instruments of trade to aid their nefarious schemes, including international terrorism and drug trafficking, that South Africa is firmly on the side of those who uphold law and order to ensure a safe flow of international goods and services, and the safe passage of individuals.
The heart of the Bill lies in the reporting duties and access to information set out in Part 3, particularly clauses 28 and 29. Clause 29 included and took over the provisions and functions of section 7 of the Prevention of Organised Crime Act, and has been amended to make specific reference to unusual transactions and tax evasion.
A new proposed 40(1) (b), which better regulates the procedures for sharing information with other investigating authorities outside South Africa, is to be welcomed, particularly in view of the terrorist attacks on the United States of America.
Whilst the ACDP appreciates that section 41 of the Constitution requires intergovernmental co-operation and the fact that a similar committee established in terms of the Prevention of Organised Crime Act never met, we do believe that a money-laundering co-ordinating committee, as proposed in previous drafts of the Act, would have served a useful purpose in, as its name implies, co-ordinating the implementation of policies and measures by the centre and other relevant Government institutions.
The ACDP will, however, support this Bill, notwithstanding that one reservation, because, as the previous speaker pointed out, it is a further weapon in the arsenal to fight crime. [Time expired.] [Applause.]
Mr I S MFUNDISI: Mr Chairperson, Government has the responsibility to see to it that the quality of life of people is enhanced. It is equally incumbent upon Government to be sure that people obtain wealth in an honest manner. And this Bill seeks to address just that. Wealth is a result of hard work, and we believe that everyone has to live by the sweat of one’s brow.
The passing of this Bill will assist in putting in place an instrument which will assist in nailing those who acquire a lot of money through underhand methods. The fact that the centre will work in collaboration with the SA Revenue Service, the intelligence Service and other investigating authorities, will help in tightening the noose around the launderers’ necks.
The use of the Internet has paved the way for laundering money in more ways than one. Attention should, however, also be given to some banks whose employees amass money from the savings of poor and illiterate clients of the banks by stealthily operating their accounts on the ATM.
We only hope that the representatives of the institutions that compose the advisory council will themselves be honest, honourable and hard-working. They should not use the advisory council to further their own nefarious ways and acts. We hope they will be persons of integrity who will resist the temptation of confiscating goods and cash from people and never reporting it, or themselves turning into modern-day Ananiases. The prevalent white-collar crime in Government circles should be nipped in the bud.
We hope that the establishment of the Financial Intelligence Centre will assist in bringing to book individuals and institutions that prey on the poor people in this country by introducing them to foreign faiths and beliefs and offering them money, as has been the case with Osama bin Laden’s family.
The UCDP supports the Bill.
Dr S E M PHEKO: Chairman and hon members, the main purpose of this Bill is to establish the Financial Intelligence Centre and the Money- Laundering Advisory Council in order to combat money-laundering activities. The Bill, when it becomes law, will impose certain duties on institutions and persons who might be used for money-laundering purposes.
The Financial Intelligence Centre is established as an institution outside the Public Service, but within the public administration. This is provided for in section 125 of the Constitution. This section deals with basic values and principles governing public administration.
Clause 3 states, and I quote:
The principal purpose of the centre is to assist in the identification of the proceeds of unlawful activities and the combating of money-laundering activities.
Clause 21 deals with money-laundering control measures. Clause 17(1) authorises search, seizure and forfeiture.
The PAC supports this Bill. It is an imperative piece of legislation in our fast-changing world, in which a lot of technology is in the hands of criminals. This makes them very sophisticated criminals, and it requires sophisticated legislation to deal with it.
Miss S RAJBALLY: Mr Chairperson, may I congratulate the hon Mabe on her maiden speech. Well done!
Organised crime is present in South Africa, as it is globally, and it is certainly a problem that needs immediate attention. One of its many noted forms is money-laundering. It was reported in the Business News by a corporate governance specialist in August this year that South Africa attracts R49,2 billion and exports R32,8 billion of laundered money each year. These estimates are not only shocking, but also intolerable.
The Government has already taken a stand in recognising money-laundering as a crime in section 4 of the Prevention of Organised Crime Act of 1998. With that in place, the next urgent step is to introduce a mechanism to combat this criminal offence. This Bill clearly provides for such a mechanism by the introduction of institutions which will inculcate it and provide a clear procedure that should be followed by a network which will contribute to ensuring that money-laundering fails.
The party notes the specifics provided for by the Bill as to which institutions and individuals are regulated by the Bill, as well as the control measures intended to be incorporated. The MF congratulates the department on its efforts to combat organised crime. It is evident that the department has not only defined this problem, but also outlined a plan of action to eradicate the problem.
The MF supports bringing to an end all organised crime, ie nationally and internationally, and places its confidence in this Bill as taking a step closer to attaining such a goal. The MF supports the Financial Intelligence Centre Bill. [Interjections.] [Applause.]
Mr C AUCAMP: Chairperson, I want to ask the following question: What went wrong? This is the fifth Bill we are debating this week, and the AEB has supported every one of them! [Laughter.]
There is an important underlying principle in a Bill like this: it is the delicate balance between the freedom of the individual, the collective responsibility of civil society and the delegated authority of the state. In an ideal world, the freedom of the individual, tempered by the collective responsibility of civil society, would be sufficient. But in a broken society, illustrated again by the events of 11 September in America, the important role of the state comes into operation as well, and we must acknowledge that.
The prerequisite must be that the state performs this function in a responsible manner in co-operation with civil society, without unnecessary infringements on the freedom of the individual. It is my opinion that this Bill succeeds in maintaining this balance.
The plus point of this Bill is the co-opting of civil society into the cause of freeing South Africa from money-laundering activities and crime, not only through reaction, but also through proactive conduct. In addition, the fact that both the Financial Intelligence Centre and the Money- Laundering Advisory Council will be institutions which are outside the Public Service, which makes them organs of civil society, is an added advantage.
Dit is duidelik dat die portefeuljekomitee goeie werk gedoen het met die finale weergawe. Die aanvanklike produk is aansienlik verbeter, soos blyk uit die volgende: in die feit dat die werknemers van die sentrum, wat ‘n noodsaaklike diens lewer, nie mag staak nie; die verbeterde bepalings ten opsigte van sekerheidsklaring; die feit dat die Minister nie in die raad dien nie; die aanverwante wette; en die inbou van ‘n verweer by ‘n vermeende oortreding.
Natuurlik kan die wet misbruik word en die sentrum in ‘n Big Brother ontaard. Dit plaas groter verantwoordelikheid op die betrokkenes om privaatheid te respekteer. (Translation of Afrikaans paragraphs follows.)
[It is clear that the portfolio committee has done a good job with the final version. The initial product has been significantly improved upon, as is evident from the following: the fact that the employees at the centre, who render an essential service, may not go on strike; the improved provisions regarding security clearance; the fact that the Minister does not serve on the council; related legislation; and the incorporation of a defence in case of an alleged transgression.
Of course, this legislation is open to abuse and the centre may degenerate into a Big Brother. This places greater responsibility on those concerned to respect privacy.]
The AEB is convinced that this legislation has become essential and that every honest citizen will co-operate with it. Money honestly earned and worked for can always stand the scrutiny of daylight. The AEB supports the Financial Intelligence Centre Bill.
Mr G SOLOMON: Chairperson … [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! I am not quite sure of the reason for the sudden exuberance, but in any case, let us hear the speech first. [Interjections.]
Mr SOLOMON: Chairperson, money-laundering is an essential activity of organised criminal gangs and, according to the hon Barbara Hogan, perhaps even some heads of state. Successful money-laundering is an invisible hand that ensures that organised crime pays. It is also a resource for funding the perpetration of some of the most serious crimes in our country. Therefore an effective antimoney-laundering regime will have an enormously positive impact on the prevention of serious criminal activity in South Africa perpetrated by organised criminal gangs.
South Africa has one of the broadest ranges of money-laundering offences in its Statute Book, in fact in sections 4, 5 and 6 of the Prevention of the Organised Crime Act of 1998. These are money-laundering itself, assisting another to benefit from the proceeds of unlawful activities, the acquisition, possession or use of the proceeds of unlawful activities, and the failure to report suspicion regarding the proceeds of unlawful activities. All of these can give rise to a charge on one of the money- laundering offences.
South Africa also has a structure for the recovery of the proceeds of profit-generating criminal activity that is more advanced than many in the world. It comprises convictions-based confiscation and civil forfeiture procedures without requiring a conviction. But the legal picture, according to Adv Pieter Smit of the office of the National Directorate of the Public Prosecutions, is incomplete without effective administrative measures which will identify money-laundering in order to facilitate its prevention, detection, investigation and prosecution.
This is the rationale behind the Bill under discussion here today. It makes provision for the establishment of a Financial Intelligence Centre and a Money-laundering Advisory Council which can serve as a conduit for receiving crucial information from accountable institutions which can be exploited for money-laundering purposes. This information would then be communicated to the relevant law-enforcement authorities for investigation.
The fight against organised crime in South Africa can be ascribed to the new democratic Government alone. The concept of organised crime was never part of the crime discourse of the safety and security regime of the apartheid government. I am not aware that the term was ever used in police and security reports or communiques before 1990.
The focus of the police and the security forces of the apartheid government was on organised resistance to apartheid, and the best of its criminal investigators were employed to crack organised resistance to the regime, not organised crime. This provided an opportunity for criminal gangs to consolidate. Organised Crime, in fact, came of age in the 1980s in South Africa. According to the Institute for Security Studies and Research, former members of the apartheid security forces are, indeed, involved in this type of activity.
This led to the view that organised crime might be a deliberate project of those opposed to democracy, that is, a conspiracy to undermine the new democratic state in South Africa. The report of the Institute for Security Studies and Research indicates that organised crime has grown dramatically since the transition to democracy began in 1990 and has caught South African law enforcement agencies unprepared. Just like legitimate multinational businesses, East Asian, Nigerian and East European groups bought into local South African criminal operations and expanded them or contracted subsidiary organisations to conduct their work for them.
The institute points out that four factors should be taken into account when measuring the extent to which organised crime has developed in South Africa since the transition to democracy. These are, firstly, the degree to which various organised crime groups have consolidated either through mergers or structured co-operations in the country; secondly, the role that former members of the apartheid security forces play in relation to organised crime.
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! [Interjections.]
Mr G SOLOMON: What is the order for, Chairperson?
The DEPUTY CHAIRPERSON OF COMMITTEES: I am trying to get the House to be more receptive to what you are saying.
Mr M J ELLIS: You were not making a very good speech.
Mr G SOLOMON: The third one is the degree to which organised criminal groups have been successful in penetrating the state in corrupting officials, and the fourth one is the degree to which foreign organised crime groups operate within the country and have forged links with local crime syndicates.
What is the extent of the problem in South Africa? Organised criminal gangs are extremely sophisticated and deceptive. Their money-laundering activities are secretive and misleading by nature because they use the same institutions and technology as legitimate businesses. Information published in 1997 by the Crime Information Analysis Centre of the SAPS indicated that 192 organised criminal groups were known to be active in South Africa at the time, with another 500 so-called target groups, the full extent of their activities still being unknown.
The crimes in which these active groups are involved include drugs, motor vehicle theft, particularly of the more expensive kind, diamonds and gold and of firearms, and the smuggling of abalone, and related criminal activity such as prostitution, murder, blackmail, corruption, hijacking of freight vehicles, armed robbery, gang violence, taxi violence and housebreaking.
Why should money-laundering be combated with intensity in South Africa? The proceeds of crime are the lifeblood of organised criminal groups. In order for them to sustain and continue with their criminal activity, they have to legitimise this income through the process of laundering. Once firmly established, organised crime operations are very difficult to eradicate. The process of laundering must be disrupted before this sets in. Organised criminal groups weaken the social fabric … [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order hon Mr Bloem!
Mr G SOLOMON: Organised criminal groups weaken the social fabric, influence collective ethical standards and undermine democratic institutions.
Leaving economic power in the hands of organised criminals will enhance their capacity to corrupt Government and law-enforcement officials. Institutions that become involved in money-laundering also face the danger of corrupt employees, fraud and the loss of control over their institutions. One of the items on the shopping list of money-launderers is an efficient financial system, which we have. But if control over the financial system is weak this will make it more attractive for money- launderers.
If we are to succeed in the fight against the danger of money-laundering, we firstly have to equip the centre with the resources to perform the task expected of it, which means that it has to be properly budgeted for. Co- operation of private sector partners is vital. Careful co-ordination of the activities of the different groupings amongst law enforcement agencies is also very essential, and we must avoid conflict amongst them.
The ANC supports this Bill, particularly the Johnny de Lange clauses. [Applause.]
Mr K A MOLOTO: Chairperson, hon members, the tabling of the Financial Intelligence Centre Bill comes at a critical moment as our economy forms an integral part of the globalised economy.
One of the key features of globalisation is the free flow of capital across borders. This is made possible by advances in information technology. Let us acknowledge that crime has become international in scope, and the financial dimensions of crime are getting increasingly complex due to this rapid flow of capital across borders. Therefore it is important that banks should know the true identity of their clients very well. One cannot simply have men wearing expensive designer suits carrying suitcases stacked with cash coming into banks and banking the money with ease.
Money-laundering has the potential to undermine our financial system if it is not dealt a vicious blow. It is common knowledge that poorly capitalised banks established by organised syndicates can weaken the banking system … [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, no business transactions in the aisles, please.
Mr K A MOLOTO: Chairperson, it is common knowledge that poorly capitalised banks established by organised syndicates can weaken the banking system, thus causing a major domestic financial crisis. A corrupt banking system increases the danger of a domestic liquidity crisis. Such developments have the potential of undermining the confidence investors have in a country’s financial system, thus encouraging capital flight and dwindling of the country’s investment reserves. South Africa cannot afford this. We need to deal a decisive blow to money-laundering.
The monitoring of the registration of banks is quite vital in maintaining a credible people’s banking system. Banks provide the necessary intermediary service in order to secure funds for productive investments. Let us look at this embarrassing occurrence. It relates to the establishment of BCCI, a deposit-taking bank established by Aga Hasan Abedi. He registered the bank in the Cayman Islands, which are situated to the north west of Jamaica. George Town, the capital on Grand Cayman, boasted 550 banks. This translated into one bank for every 15 residents. The banks had collective assets in excess of R400 billion. What is more puzzling is that less than 15% of these banks registered in the Cayman Islands received cash. There were no tellers and no vaults to keep money. Most of the banks were only centres for dealing with the paperwork relating to money deposited in other countries and for electronically facilitating money-laundering in other jurisdictions.
Mr Abedi moved his top management to London after registering the bank in the Cayman Islands. The Bank of England gave BCCI credibility by confirming every year for fifteen years that its finances were in order. It later left the Bank of England with egg on its face. BCCI was to turn into a big money- laundering scheme. Private jets belonging to banks would fly cash to branches in Panama or the Cayman Islands and deposit it there, which would be wired later to Luxembourg, where the paper trail of the dirty money would disappear.
The FIC obliges banks to keep all records of their transactions for a stipulated period. This is indicative of the need to maintain control of the registration of banks. This Parliament has done this through various pieces of legislation. Money-laundering directs money from sound investment to risky low-quality investment and impacts negatively on economic growth. Typically money-launderers will invest in property and quickly sell that property, thus triggering a massive oversupply of property in that location. This unnecessary oversupply depresses property values.
Money-laundering distorts data on actual national expenditure and income. Therefore it complicates the efforts of government to manage its economic policy and design appropriate measures in order to intervene in certain sectors of the economy. On the national figures there would be an increase in the amount of taxable income. However, that income would simply disappear. It undermines the tax base and has major consequences on government’s projections of income.
Money-laundering undermines the monetary system of any country. It takes money out of financial systems and distorts the value of the exchange rate. The demand and supply of one’s currency will not reflect a true picture because of these sudden unexpected inflows and outflows.
Let me conclude by relating a very interesting story. A Colombian cartel boss, Pablo Escobar, had to write off R40 million in cash, money which rotted in a California basement. He could not launder the money as quickly as he wished.
Let us make it difficult for drug traffickers to wash their dirty money as they wish. Banks have to join Government to fight this menace. [Applause]
The MINISTER OF FINANCE: Chairperson, hon members, let me express sincere appreciation to all of the speakers from all the parties for their support for the Financial Intelligence Centre Bill.
I know that the Bill was debated extensively over a long period in the joint committees, and I know that some members may be tired by now because the debate has been very long. [Interjections.] But I would like to say to the hon Ellis that we must not take this legislation for granted. The issues that the hon Moloto has just shared with us are exceedingly important. It needs to be in our collective psyche that we must take joint responsibility for the prevention of these kinds of crimes. The support that all parties have given here must surely be translated into what we expect from institutions out there - their voluntary participation.
One can go to the Antlantic Seaboard here and ask how many of those very expensive apartments had been bought with hard cash, with the estate agents present and overseeing these transactions. One can go and look at other kinds of assets that have been acquired in this way. There have been stories about drug lords being able to deposit millions of rands into otherwise normal high-street institutions.
We have to change this. We have to change the mind of South Africa and we have a collective responsibility to do that. My plea this afternoon is that this very wide-ranging support for this Bill should be taken out there so that it can be taken up by all South Africans, in order to ensure that our children have a place. If drug lords cannot deposit dirty money, they will not sell the drugs, and that will give our children a chance. We have a collective responsibility, therefore let us take it forward. [Applause.]
Debate concluded.
Bill read a Second time.
UNPARLIAMENTARY LANGUAGE
(Ruling)
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, I need to give a ruling. During question time on Wednesday, 3 October 2001, the hon Mr M J Ellis raised a point of order about a remark made by the hon the Minister of Sport and Recreation, with reference to the hon Mr T D Lee. A further point of order in relation to the same remark was raised by the hon Mr C Morkel.
I declared myself willing at the time to be persuaded that a ruling should be made. Having had the opportunity to study the relevant Hansard, I wish to rule as follows: The contested remark, which was clearly with reference to the hon Mr Lee, is contained in the following sentence:
Chairperson, we are used to coconuts.
[Laughter.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order!
Parliament is one of the most important public forums in the country, and it is a principle applied in most parliaments that, and I quote from the authoritative Erskine May’s Parliamentary Practice:
Good temper and moderation are the characteristics of parliamentary language.
It must be borne in mind that members speak not so much in their personal capacity in Parliament, but as representatives of the public. In that context, offensive language usually gives rise to disorder, which then prevents members from focusing on the issues of substance they have before them.
The Chair, necessarily, exercises a discretion as to which remarks are ruled to be offensive. However, in the nature of things, derogatory or insulting remarks about a member’s physical attributes or appearance, or those based on other considerations, are clearly intended to give offense.
Referring to another member as a ``coconut’’ must be regarded as personally offensive, and I must therefore ask the hon Minister to withdraw the remark. [Interjections.] Order!
The MINISTER OF SPORT AND RECREATION: Chairperson, in withdrawing the remark - because I have to withdraw the remark - I clearly have to put the record straight. If one reads Hansard, disk 286 and tape 295 of 3 October, from which the Chairperson correctly quoted, it clearly says: ``Chairperson, we are used to coconuts.’’ [Interjections.] That is correct.
In withdrawing this, I would like to make a very quick comment. I would like to stress …
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon Minister, I think you have made an explanation, and all that is needed by the Chair, at the moment, is that you withdraw the offensive remark and …
The MINISTER OF SPORT AND RECREATION: Chairperson, I withdraw that remark, but I would like to make a point that follows up on a motion that has been made on this issue.
The CHAIRPERSON OF THE COMMITTEES: Order! I think someone has a point of order! Let me hear the point of order first.
Mr D H M GIBSON: Chairperson, on a point of order: You have ruled that the reference to ``coconut’’ is offensive and should be withdrawn. A coconut, when used in relation to coloured people, is racially offensive, because it says that they are black outside and white inside. There are certain members who find that funny, but coloured people do not find it funny. Mr Balfour should just withdraw his remark unreservedly. [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order, hon members! Hon Bloem, are you rising on a point of order?
Mr D V BLOEM: Yes, Chairperson. The Minister must withdraw his remark, but the coconut is not in the House. [Laughter.] I mean, what is the use of withdrawing those remarks when the coconut is not here? [Applause.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, may I please call you to order. I would like to remind you that we are dealing with a matter of great sensitivity, and I would not like the hon House to make this a matter of mirth.
The hon Minister has withdrawn the remark. It is within the discretion of the Chair to afford him a brief opportunity for an explanation, provided that those remarks are confined to the question that is being referred to and do not go broader than that. It should not be an opportunity for a speech. So, the hon Minister can make a very short comment.
Mr K M ANDREW: Chairperson, on a point of order: Mr Bloem has just made a point. [Laughter.] I would suggest that it was in deliberate and direct contempt of the Chair. You had hardly given your ruling … [Interjections.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Order!
Mr K M ANDREW: You had hardly finished giving your ruling that the use of the word coconut in respect of a member is offensive and unparliamentary, when that hon member stands up and says the coconut is not here.
I believe that a withdrawal in itself is not sufficient. I believe that you should consider the matter, and that there should be further action against members who deliberately defy and express contempt of the Chair in that way. [Applause.]
An HON MEMBER: Withdraw and say monkey nuts!
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon Bloem, could you please go to one of the microphones. In the context of the ruling that I have made, I think the hon Andrew is correct in pointing out that a matter which this Parliament regards seriously cannot be made light of, more especially in the light of the ruling that I had given. I would like you please to withdraw your remark.
Mr D V BLOEM: I withdraw, Chairperson. [Laughter.]
The DEPUTY CHAIRPERSON OF COMMITTEES: Hon Minister, you may make a very brief explanation.
The MINISTER OF SPORT AND RECREATION: It is going to be very brief, Chairperson. That was never intended to be a remark against Mr Lee - that is the first thing. Secondly … [Interjections.] The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Let the hon Minister finish his brief explanation.
The MINISTER OF SPORT AND RECREATION: … there are rude people on that side. [Interjections.] In a motion that was made on this issue …
The DEPUTY CHAIRPERSON OF COMMITTEES: Order, hon Minister! I think, with regard to our now going on to a secondary matter, I would not entertain that. The remarks have been withdrawn.
Before I recognise you, hon member, I have a letter here that has been addressed to me by the hon Craig Morkel. I think he has raised several matters here, but since I have not had the opportunity to study this letter, I request that this matter be deferred further so that when it has been properly reviewed we could make some sort of pronouncement on it.
So, if it is in relation to this letter, I would like to ask you to regard the matter as being deferred to another time.
Mr C M MORKEL: Mr Chairperson, I accept that you will give a ruling on this at your earliest convenience. I drafted this letter as a point of order on your ruling on the Minister’s comments during Question Time, last week Wednesday regarding Question 340.
There are some matters in this letter that may fall outside the ambit of your previous ruling regarding Wednesday, 3 October, that I have also included, and I would also like you to include them. I raise it now simply because it was said in isiXhosa and the interpreters did not interpret it immediately, and …
The DEPUTY CHAIRPERSON OF COMMITTEES: Hon member, let us avoid creating confusion. I have indicated that I will respond to the letter in the appropriate manner, and I think it would be important that we leave it at that.
Mr D H M GIBSON: Chairperson, on a point of order: There have been some extremely important matters which have been raised, which relate to racial insults and their place in this Parliament. I wonder whether you are in a position to give a general ruling concerning that matter or whether you would be good enough to consider ruling about racial insults.
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon member Nel, would you like me first to make a comment or are you going to respond directly to that?
Mr A C NEL: Chairperson it is not a response but, perhaps, a request in the same vein. [Interjections.] So, I think you could perhaps deal with it together. Could you perhaps just clarify the ruling that you gave? I understood it to be that the remark itself was offensive. I did not hear you pronounce yourself on whether that remark was racially intended or otherwise. Could you perhaps clarify that?
The DEPUTY CHAIRPERSON OF COMMITTEES: Order! Hon members, the hon Mr Nel is quite correct. In making the ruling, I limited myself to the offensive remark, asked for that remark to be withdrawn, and that remark was withdrawn. That completes that portion of the task that was assigned to the Chair.
The hon Mr Gibson raised a further point on a more general aspect relating to race-based remarks. As for that and the guidelines that he is seeking, I think it would be appropriate to deal with this matter also at some other stage. But that would be separate from the matter that we had in hand this afternoon. I hope that when we deal with it, you will have further opportunities to make your inputs.
REPEAL OF VOLKSTAAT COUNCIL PROVISIONS BILL
(Second Reading debate)
Order disposed of without debate.
Bill read a second time.
NATIONAL HEALTH LABORATORY SERVICE AMENDMENT BILL
(Second Reading debate)
Order disposed of without debate.
Bill read a second time.
The House adjourned at 16:22. ____
ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS
ANNOUNCEMENTS:
National Assembly and National Council of Provinces:
- The Speaker and the Chairperson:
(1) The Minister for Provincial and Local Government withdrew the
following Bill on 11 October 2001:
(i) Disaster Management Bill [B 58 - 2001] (National Assembly
- sec 76).
(2) The Minister for Agriculture and Land Affairs submitted the
Wetsontwerp op die Herroeping van die Wet op die KwaZulu
Suikerrietkwekersvereniging [W 48 - 2001] (National Assembly - sec
75) to the Speaker and the Chairperson on 11 October 2001. This is
the official translation of the KwaZulu Cane Growers' Association
Act Repeal Bill [B 48 - 2001] (National Assembly - sec 75), which
was introduced in the National Assembly by the Minister on 23
August 2001.
(3) The Joint Tagging Mechanism (JTM) on 11 October 2001 in terms of
Joint Rule 160(2), classified the following Bill as a constitution
amendment Bill (section 74):
(i) Constitution of the Republic of South Africa Second
Amendment Bill [B 78 - 2001] (National Assembly - sec 74). National Assembly:
- The Speaker: Bill passed by National Assembly on 11 October 2001: To be submitted to President of the Republic for assent:
(i) National Health Laboratory Service Amendment Bill [B 56 - 2001]
(National Council of Provinces - sec 76).
- The Speaker:
Message from National Council of Provinces to National Assembly:
Bills, subject to proposed amendments, passed by National Council of
Provinces on 11 October 2001 and transmitted for consideration of
Council's proposed amendments:
(i) Companies Amendment Bill [B 35 - 2001] (National Assembly - sec
75) (for proposed amendments, see Announcements, Tablings,
Committee Reports p 1068).
The Bill has been referred to the Portfolio Committee on Trade
and Industry of the National Assembly for a report on the
amendments proposed by the Council.
(ii) Correctional Services Amendment Bill [B 8B - 2001] (National
Assembly - sec 75) (for proposed amendments, see Announcements,
Tablings, Committee Reports p 1062).
The Bill has been referred to the Portfolio Committee on
Correctional Services of the National Assembly for a report on
the amendments proposed by the Council.
- The Speaker:
The following changes have been made to the membership of Standing
Committees, viz:
Private Members' Legislative Proposals and Special Petitions:
Appointed: Da Camara, M L.
COMMITTEE REPORTS:
National Assembly:
-
Report of the Portfolio Committee on Agriculture and Land Affairs on the Land Affairs General Amendment Bill [B 71 - 2001] (National Assembly - sec 75), dated 9 October 2001:
The Portfolio Committee on Agriculture and Land Affairs, having considered the subject of the Land Affairs General Amendment Bill [B 71 - 2001] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 71A - 2001].