South Africa: Anti-Terror Bill's Impact on Non-Profit Organisations Debated

Anti-money laundering Bill may fail the international test it was written to pass In our scramble to meet international requirements preventing financing of terrorism, South Africa risks making life unnecessarily difficult for non-profit organisations (NPOs). The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill currently before Parliament is intended to keep South Africa off the grey list of the Financial Action Task Force (FATF), when the next assessment is due in 2027. Keep up with the latest headlines on WhatsApp | LinkedIn FATF is an intergovernmental body that sets the international standards for combating money laundering, terrorist financing and the financing of weapons of mass destruction. Its original job was money laundering. It took on terrorist financing after the 11 September 2001 attacks. The grey list identifies countries with strategic deficiencies in their anti-money laundering, terrorist financing, and proliferation financing controls. They are then subject to increased scrutiny and higher cost for transactions. FATF sees NPOs as a possible channel for terrorist money. Charities raise money from the public, they are trusted, they often work in conflict areas, and they move funds across borders with less scrutiny than banks or companies face. In some cases, charities have been set up as fronts or had their funds diverted to armed groups. FATF used to treat the whole sector as suspect, but revised its standards in 2016 and again in November 2023, after its own review found that legitimate NPOs had lost funding and been denied banking services. Countries must now identify which NPOs are actually at risk, and apply measures to them that are "focused, proportionate and risk-based", without unduly disrupting or discouraging legitimate work. The Department of Social Development (DSD) says that the purpose of the current NPO amendments is to fix deficiencies under Recommendation 8, the FATF standard on non-profit organisations, and to move South Africa from "partially compliant" towards "compliant". That is a legitimate aim. Nobody in the sector wants to go back on the grey list. Charities and their beneficiaries feel it first when banks close accounts and donors pull back. But assessors do not only check that a law exists. They check whether it targets the right organisations in the right way. A blunt law can fail that test as surely as a missing one. The NPO Act already has two kinds of registered NPOs. Since 2022, organisations that donate or provide services across South Africa's borders must register. Everyone else registers voluntarily: crèches, soup kitchens, sports clubs, church groups. They usually register because a funder or a government department will not deal with them without a registration number. Most organisations on the register are in this second group. The draft Bill that Treasury published in January would have applied the new monitoring and enforcement powers to both groups. After submissions from the sector, the Bill tabled in Parliament in May corrected this. The new compliance notices and administrative sanctions apply only to organisations "required to register". That was an early win. The concern that remains is whether "required to register" is sufficiently connected to the risk-assessed subset of NPOs that Recommendation 8 says should be supervised. A cross-border test is a proxy for risk, not a finding of it. South Africa has done the harder part: its 2024 NPO sector risk assessment identifies where the risk lies. But the Bill does not tie the registration duty, or the new enforcement powers, to that assessment. When assessors look for evidence that supervision follows risk, the law should show them the link. The Bill also leaves the Act's existing enforcement rule where it is. Under the Act, any registered organisation that gets a compliance notice has one month to comply, unless the director extends that period on good cause shown. If it doe