South Africa


SA’s harebrained scheme to register NPOs will not solve terrorist financing concerns

SA’s harebrained scheme to register NPOs will not solve terrorist financing concerns

South Africa’s response to the threat of being greylisted by trade body FAFT is to force the registration of all non-profits with the NPO Directorate. But this notion has far-reaching — and patently unconstitutional — repercussions.

Rabbits were introduced to Australia in 1859 so that they could be hunted. Yep, a daft reason, but it was more than 160 years ago.

According to National Geographic, Thomas Austin, a “wealthy settler who lived in Victoria, Australia, had 13 European wild rabbits sent to him from across the world, which he let roam free on his estate. From this one backyard sanctuary, it took only around 50 years for these invasive rabbits to spread across the entire continent.” Today, despite various efforts, the Australian government is still trying to find ways of dealing with the problem. 

Sadly, it seems we are unwilling to learn. 

South Africa is facing the threat of being greylisted by a body called the FATF. If you think it sounds bad, it’s because it is. Business Leadership SA CEO Busisiwe Mavuso has said: “Greylisting has potentially serious implications for the economy, increasing the cost of financial transactions with the rest of the world. It will make it harder to do business for anyone operating financial accounts abroad or dependent on foreign financial services providers.”

Let’s take a step back. Who or what is the FATF? 

The Financial Action Task Force (FATF) describes itself as a global money-laundering and terrorist-financing watchdog. The intergovernmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to “generate the necessary political will to bring about national legislative and regulatory reforms in these areas”. 

So, the FATF seems to be doing some good work and, of course, we should strive to avoid being greylisted. SA holds its breath on FATF greylisting, an article in the Sunday Times, further highlights why it would be bad and BusinessTech has put forward some suggestions for what we could do

South Africa was evaluated in November 2019 and there was a further evaluation of South Africa’s progress in October 2021. What does this have to do with rabbits? Sadly, despite having had some years to correct and address the issues, it seems South Africa’s response is to hurry along — with the public given just 10 days to comment — a General Laws Amendment Bill.

The bill is 40 pages and seeks to address critical issues. Like those of Thomas Austin, it seems many of the ideas have been suggested on a whim. But unlike the cretin coloniser in Australia in 1859, our government needn’t act on harebrained ideas to address complex issues.

In the current instance, not only has our government failed to allow for anything like meaningful consultation, it has also put forward suggestions that would have far-reaching — and patently unconstitutional — repercussions.

We cannot comment on the other issues raised — we can only hope other civil society bodies and industry experts will address those — but, for us as a civil society organisation, the suggestions relating to NPOs are deeply concerning.

The FATF’s conclusion about South Africa’s risk posed for terrorist financing (TF) in non-profit organisations was: “South Africa has not yet done an assessment of their broader NPO sector to identify those organisations, based on their characteristics or activities, that put them at risk of TF abuse. South Africa also has no capacity to monitor or investigate NPOs identified to be at risk of TF abuse.” (See page 176)

Seems okay, but the problem is the proposed response is to force the registration of all non-profits with the NPO Directorate, which falls under the Department of Social Development. Any NPO that has tried to register with the NPO Directorate will know how difficult it is, how onerous the requirements are and how slow the whole process is.

Compulsory registration of NGOs

Leaving those frustrations aside, however, there are several key challenges with the notion of compulsory requirements of NPOs.

First, compulsory registration is at odds with international law, constitutes an unjustifiable incursion on the right to freedom of assembly and is open to substantial abuse. A notification procedure, in which NPOs can notify of their formation, is preferred as it doesn’t open registration to abuse or possible limitation of the actions of NPOs. We highlighted these issues in detail in our submission made in June 2022 on the Draft NPO Amendment Bill.

Second, leaving aside the near certainty that the amendment wouldn’t pass constitutional muster, the amendments are pointless in that they will fail to address the problem they seek to address. Forcing an NPO such as ours to register (as we have voluntarily, largely because of donor requirements) isn’t going to stop potential terrorist financing. 

Compulsory registration cannot stop astroturfing NPOs which, often in addition to being created to look legitimate, may actively contribute to other elements relating to terrorism, such as recruitment. 

Compulsory registration isn’t going to suddenly empower the government to look for actual terrorist-financing red flags, such as significant cash flows, or high funds relative to staff and activities carried out, or even an analysis of the donors. It also isn’t to suggest that NPOs shouldn’t be clear and transparent about who their donors are, and they should make their audited financials available.

What is clear is that combating terrorist financing in the NPO sector requires a coordinated approach and the capacity and resources to carry out complex investigations. None of which is aided by compulsory registration.

Visit Daily Maverick’s home page for more news, analysis and investigations

In addition, compulsory registration fails to consider the rise of the internet and the way it can be abused for terrorist financing of NPOs. Knowing who the directors are doesn’t help in the face of cryptocurrency, which is difficult to trace and is increasingly being used in criminal activities.

Third, and perhaps most concerning for the drafter of the amendments, the FATF itself warns of overreach in seeking to address terrorist financing in the non-profit sector. In seeking to address terrorist financing in the NPO sector, it asserts that “focused risk-based measures do not unduly disrupt or discourage legitimate charitable activities”.

The Interpretive Note specifically states that “measures to protect NPOs from potential terrorist financing abuse should be targeted and in line with the risk-based approach. It is also important for such measures to be implemented in a manner which respects countries’ obligations under the Charter of the United Nations and international human rights law.” (See FATF High-Level Synopsis of the Stocktake of the Unintended Consequences of the FATF Standards)

Yet again, instead of being seen as a critical partner in developing and building South Africa, civil society was not even consulted for the sector-wide change in the General Laws Amendment Bill.

The current NPO Act was first passed in 1997. The sector, over the years, has begged for a new policy and white paper that can address and really harness the strengths of civil society and help combat crimes like terrorist financing.

Instead, the sector was presented with a rushed and disastrous draft amendment resulting in a call by the NPO Working Group for the bill to be withdrawn. Again, instead of listening, we have a more expanded proposed change in the General Laws Amendment Bill.

The consequences of moving ahead will present something far worse than just a rabbit problem. Far from solving the problems, the draft of the General Laws Amendment Bill will not address the challenges raised by the FATF, so we will likely be greylisted anyway. There will also be a constitutional challenge, and there will be a further breakdown in trust between civil society and government.

It’s not too late and there really are many positive actions that can be taken. The real question is, is anybody listening? DM/MC

Disclosure: William Bird is a member of the NPO Working Group. This piece is written in his capacity as director of Media Monitoring Africa only.


Comments - Please in order to comment.

  • Frank Fox says:

    NPOs are not just charitable organisations. Every “body-corporate” or home owners association is an NPO. These do not receive donations but raise funds from their members to fulfill their obligations to their members. Similarly, many professional associations fall into the same category. Registration of all these is just going to create work. No doubt government will want a fee for registration which is a further waste of members’money and an opportunity for corruption at the State level.

  • Malcolm McManus says:

    Its a bit daft for FAFT to engage with terrorist governments in the first place.

Please peer review 3 community comments before your comment can be posted


This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.

Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Daily Maverick Elections Toolbox

Feeling powerless in politics?

Equip yourself with the tools you need for an informed decision this election. Get the Elections Toolbox with shareable party manifesto guide.