Manuel Seeking 'Further Advice' On Extension Of ID Deadline For South African Banks

by Robert Lee, for LawAndTax-News.com, London

16 June 2004

Speaking in Parliament on Friday, South African Finance Minister, Trevor Manuel offered both hope and discouragement to South Africa's banking community regarding the country's new money laundering laws.

Under the 2001 Financial Intelligence Centre Act 38, banks and other "accountable" institutions, such as casinos, law firms, and estate agencies, were, from June 30 2003, obliged to verify the identity and residence of new clients before proceeding with transactions.

The affected institutions were also obliged to provide such data for their existing clients, but were given until the end of this month to do so. The law stipulates that should the banks not receive the necessary information from their customers, they must freeze the 'questionable' accounts until such time as verification of the account holder's identity is obtained.

Responding to the protests of many South African banks, which argued that the identification criteria were too stringent for the country's poorest citizens, and predicted that they would fail to meet the deadline as a result, the Financial Intelligence Centre (FIC) showed a little leniency, granting banks which thought themselves unlikely to meet the deadline a small window in May to come forward and request an extension.

However, Mr Manuel appeared to dash all hopes of exemption from the requirement to verify the identity of existing bank clients by the end of the month, announcing on Friday that:

"I am advised most inquiries are based on misunderstandings and I am confident that account holders and banks will find the regulations are sufficiently accommodating."

However, the Finance Minister also offered a glimmer of hope for the banking sector, revealing that he is seeking "further advice" regarding an overall extension of the deadline, and will be making an announcement on the matter soon.

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