Category Life Insurance

FISA reacts to the outcome of the Parliamentary Standing Committee on Finance’s meeting on the proposed anti money laundering bill

15 November 2022 FISA

In October 2022, FISA made an urgent submission to the Parliamentary Standing Committee on Finance (SCOF) regarding a parliamentary bill, the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Bill, which proposes changes, inter alia, to the Trust Property Control Act, 57 of 1988 (the Act) and is being fast-tracked due to the threatened grey-listing of South Africa.

The comprehensive and user-friendly submission was co-authored by two of the top trust law experts in South Africa, Professors Francois du Toit and Bradley Smith, and submitted by the extended deadline of 25 October 2022. A clause-by-clause examination of the Bill was conducted by SCOF on 11 November 2022.

The submission commented on various provisions of the Bill, focusing on the proposed amendments to the Act and in particular regarding the inclusion of trustees in the definition of “beneficial owner” of a trust.

Mr Louis van Vuren, CEO of FISA said: FISA is exceedingly disappointed in the outcome of the SCOF meeting. Our recommendations appear to have been essentially ignored, with only cosmetic refinement.

The proposed changes fly in the face of South African trust and property law and are in certain instances in conflict with other provisions in the Trust Property Control Act.

The effect of the proposed changes may open the door for premature acquisition of certain rights by trust beneficiaries, which will encroach on the discretion afforded to trustees and severely limit the existing rights of trustees and the founder of a trust.

If finally adopted by Parliament and signed into law by the President, the changes could have a devastating effect on the cost of proper trust administration, particularly in the case of smaller trusts where vulnerable beneficiaries need benefits intended for them to be protected effectively.

As the only professional industry body solely focused on fiduciary matters in South Africa, FISA strongly recommends that the FISA submission be revisited and the requisite changes made before the Bill is signed into law”, said Mr van Vuren.

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