GENERAL LAWS AMENDMENT BILL
Greylisting bill’s registration requirements for nonprofits to be refined
National Treasury and the Financial Intelligence Centre provided preliminary responses to public comments on the General Laws Amendment Bill on Tuesday. In response to the concerns of the NPO sector, a refined approach to the compulsory registration of nonprofits was proposed.
The General Laws Amendment Bill will no longer require the compulsory registration of all nonprofit organisations (NPOs). Given the input of stakeholders through public comments on the bill, Treasury has proposed a refined approach to the registration requirement.
In a parliamentary meeting of the Standing Committee on Finance on Tuesday, Treasury and the Financial Intelligence Centre gave responses to public submissions on the bill received by the initial deadline of 10 October. The deadline for comments has since been extended to Tuesday, 25 October.
Read in Daily Maverick: “Period for public comments on greylisting bill extended after NPO sector raises red flags”
In the responses, presented by Treasury, it was stated that the issue of mandatory registration of NPOs under the NPO Act was undergoing “careful consideration to develop drafting refinements to present to the committee”.
“Not all NPOs would be required to register; the following NPOs would be required to register:
- “Any NPO that makes donations to individuals or organisations domiciled in a foreign country, including when such individuals are physically in South Africa; and
- “Any NPO that provides humanitarian, charitable, religious, educational or cultural services outside of South Africa’s borders.”
According to the Financial Action Task Force’s (FATF) definition, an NPO is a “legal person or arrangement or organisation that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for the carrying out of other types of ‘good works’.”
Addressing NPO sector concerns
The General Laws Amendment Bill (full title: “General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill”) will enact amendments across several acts, including the NPO Act. It is intended to address deficiencies identified in the FATF’s Mutual Evaluation Report of South Africa from October 2021, in order to avert greylisting of the country.
In Tuesday’s presentation, Treasury said there had been 43 commentators on the bill by 10 October, 30 of which were from the NGO sector.
The concerns raised by stakeholders in the NPO sector in recent weeks have included:
- The lack of capacity in the Department of Social Development’s NPO Directorate to implement the bill’s new provisions;
- The administrative burden that compulsory registration would place on smaller NPOs; and
- The potential for politically motivated abuse of the compulsory registration requirement to hinder the operation of certain NPOs.
According to Treasury, retaining a completely voluntary approach to the registration of NPOs would not be enough to ensure compliance with the FATF’s recommendation 8, which requires countries to apply “focused and proportionate measures, in line with the risk-based approach, to… non-profit organisations to protect them from terrorist financing abuse”.
“It is sought to define the scope of NPOs that would be required to register to those that most clearly pose a risk to anti-money laundering and combating terrorism financing,” stated Treasury. “Other NPOs would continue to be able to register voluntarily.
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“By narrowing the scope of NPOs that must register, some of the other concerns and comments [on the bill] may potentially fall away… because the governance requirements for those NPOs that are required to register should be reasonably rigorous.”
Treasury acknowledged that certain state agencies would require additional resources to meet their expanded mandate under the bill, stating: “Through the budget process, government will work with those departments to ensure adequate resourcing of these priority functions.”
Wording would further be included in the NPO Act to ensure that the NPO Directorate did not have the “discretion to refuse registration if the requirements of the act are complied with”, according to Treasury. This would ensure that the “power of registration” could not not be exercised in a way that infringed on the rights to freedom of association and religion of organisations.
Speaking on behalf of the NPO Working Group at the parliamentary meeting, Nicole Copley of ngoLAW said they were “relieved and delighted” by the switch to a focused and risk-based approach to NPO registration. DM/MC