South Africa’s preparations for its upcoming Financial Action Task Force (FATF) Mutual Evaluation have entered a decisive phase. National Treasury and the Financial Intelligence Centre (FIC) have published two significant regulatory instruments – the Draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2025 and Draft Directive 10 on geographic location reporting – both of which carry material implications for financial services intermediaries, particularly small and medium enterprises.
The FIA has engaged substantively with both consultations, submitting detailed commentary that balances support for South Africa’s AML/CFT objectives with advocacy for proportionate, practical implementation.
The Draft General Laws Amendment Bill
The Amendment Bill proposes sweeping changes across four pieces of legislation: the Nonprofit Organisations Act, the Financial Intelligence Centre Act (FICA), the Companies Act and the Financial Sector Regulation Act. Its reach is broad, and its cumulative impact on intermediaries warrants careful consideration.
Among the most consequential proposals for FIA members are the FIC’s expanded powers to conduct lifestyle audits of individuals associated with accountable institutions. The Bill introduces the concept without defining what triggers such an audit, what information intermediaries must supply, or how far the FIC’s reach extends into client records.
For intermediaries handling single-need transactions where detailed income and expenditure data may never have been collected, this creates significant uncertainty. The FIA has called for the publication of clear guidance – potentially through an updated Public Compliance Communication – to establish the boundaries of these obligations.
The extension of record-keeping requirements from five to seven years is another area of concern. This change increases storage, cybersecurity and archival costs – fixed expenses that weigh disproportionately on smaller firms operating on thin margins.
Notably, the FATF’s own assessment does not appear to have identified recordkeeping deficiencies as a shortcoming, raising questions about the rationale for this extension. The FIA has requested that National Treasury provide clear justification and, should the extension proceed, allow transitional arrangements for firms to adjust their data retention systems and policies. The interaction between extended retention periods and POPIA’s data minimisation principles also requires express clarification.
The Bill further expands information-sharing powers to include the Public Procurement Office and the Border Management Authority, broadening oversight of clients with political or procurement exposure. While enhanced scrutiny serves legitimate objectives, the FIA has emphasised that expanded sharing must be accompanied by minimum information security standards, breach notification mechanisms, and proportionality safeguards to prevent excessive administrative burden on intermediaries.
On beneficial ownership, the proposed penalties of R10 million or 10% of turnover for non-compliance with filing requirements could prove catastrophic for SMEs, particularly where non-compliance stems from administrative oversight rather than deliberate evasion. The FIA has advocated for phased enforcement, practical guidance on acceptable documentary evidence, and public access to beneficial ownership registers filed with the CIPC to assist accountable institutions in their verification processes.
Draft Directive 10: Geographic Location Reporting
The FIC’s Draft Directive 10 introduces requirements for accountable institutions to report detailed geographic information about their head offices, branches and subsidiaries. While the objective of maintaining accurate location data is sound, the Directive’s broad definitions create practical difficulties for intermediaries.
The definition of “branch” uses open-ended language – “includes, but is not limited to” – which could inadvertently capture home offices, serviced office spaces and co-working facilities. In the post-COVID environment where many FIA members operate with distributed or hybrid teams, this ambiguity is particularly problematic. Similarly, the head office definition does not adequately account for virtual working arrangements, which have become standard practice across the industry.
For complex group structures, the proposed 90-day compliance window may be insufficient, risking inaccurate or incomplete submissions that would undermine the FIC’s own data quality objectives. The FIA has proposed extending this to 180 days and eliminating duplicative reporting where group entities are themselves registered accountable institutions.
A consistent message
Across both submissions, the FIA’s advocacy centres on consistent themes: proportionality in obligations and penalties, clear definitions to enable effective compliance planning, adequate transitional periods, and SME-specific guidance from regulators. The cumulative compliance burden of these and other concurrent regulatory initiatives – including CoFI Bill preparations and the FSCA’s Omni-Risk Return – threatens to create structural disadvantages for smaller firms, potentially driving market consolidation at the expense of competition and consumer choice.
The FIA remains committed to constructive engagement as these instruments progress and will continue to represent the interests of its membership throughout the legislative process.