Key compliance changes in South Africa’s AML/CTF Amendment Bill for 2025

In December 2024, the South African Treasury published the draft AML and CTF Amendment Bill, which is now open for public comment.

According to RelyComply, this bill aims to strengthen South Africa’s financial compliance landscape by harmonising five critical pieces of legislation. The government is working towards rectifying the country’s greylisting status, which has been a significant setback for South Africa’s global regulatory standing since February 2023.

The bill not only seeks to align local regulations with international standards but also prepares South Africa for an upcoming evaluation by the Financial Action Task Force (FATF). The FATF is set to conduct a Mutual Evaluation Report (MER) in early 2025, with a subsequent on-site visit in May to verify the country’s progress on the action items.

Following consultations with various bodies, including the Department of Social Development, the Financial Intelligence Centre (FIC), the South African Reserve Bank (SARB), and others, several notable amendments are set to come into effect. The bill introduces stricter compliance requirements, better governance, and expanded regulatory powers over emerging risks, threats, and technologies.

One of the core updates involves risk management protocols for new products. Financial institutions must now consider the risks posed by technological advancements when developing comprehensive risk management plans. Enhanced due diligence (EDD) will be mandatory for all high-risk clients, particularly when verifying the source of funds. High-risk clients will also need to be re-verified every three years.

Another significant change includes the public disclosure of beneficial ownership information for all companies and trusts. Entities must maintain a public register listing those who hold at least 25% of the ownership or voting rights, with administrative penalties in place for non-compliance. This information will need to be accessible to relevant authorities for a period of five years.

Suspicious Transaction Reports (STRs) must be submitted to the FIC within 15 business days of identifying suspicious activities. The bill also tightens the reporting obligations related to Terrorist Property Reports (TPRs), outlining clear procedures and timelines for compliance.

The FIC has been granted the authority to issue real-time compliance directives and carry out unannounced inspections to ensure AML/CTF adherence. Businesses that fail to meet these requirements face increased fines, which can reach up to R10m or 10% of a company’s turnover for repeated non-compliance.

In the event of money laundering assistance, individuals could face up to 15 years in prison or substantial fines based on the severity of the breach. The NPO Act changes also introduce penalties for individuals convicted of non-compliance, which could include fines of up to R1m or five years in prison.

To further strengthen the framework, new developments encourage the use of onboarding technology, such as biometric verification and electronic Know Your Customer (e-KYC) solutions. These advancements aim to improve the accuracy of client identity checks.

Bradley Elliot, CEO at RelyComply, highlighted that accountable institutions extend beyond traditional financial sectors. Legal firms, real estate agencies, and even non-profit organisations must now comply with the same robust AML/CTF processes to avoid risks associated with non-compliance. The bill underscores the importance of having proactive, comprehensive compliance procedures that are fully auditable by the FIC.

South African businesses must adopt a more proactive approach to identifying and managing risks associated with emerging technologies and new financial products. The financial sector, in particular, must stay informed about developments in delivery mechanisms and possible partnerships that could increase the risk of money laundering or terrorist financing activities.

Bradley Elliot also emphasised that institutions need to invest in digital systems, such as automated workflows, to streamline their AML/CTF operations. This will help businesses maintain compliance with the updated requirements and safeguard against regulatory risks.

The amendment bill also calls for international cooperation, encouraging the sharing of compliance information among global AML bodies. This collaboration is vital for enhancing transparency and ensuring that institutions stay ahead of evolving threats.

With increasing penalties for non-compliance and a more stringent regulatory framework, the AML/CTF Amendment Bill signals South Africa’s commitment to improving its regulatory environment. For businesses, this bill presents both a challenge and an opportunity to refine their compliance systems and maintain oversight in a rapidly changing financial landscape.

The upcoming FATF evaluation and potential changes to South Africa’s greylisting status make this a crucial time for South African businesses to review their AML/CTF measures. Institutions must ensure they are prepared to meet these new requirements ahead of the FATF’s assessment and the official implementation of the bill.

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