Nothing to fear in law on Zuma's desk

New regulations aimed at keeping politicians honest are being delayed through intense lobbying, which risks putting South Africa behind the rest of the world in money-laundering laws.

A number of South Africa's trading partners are already monitoring the financial transactions of so-called politically exposed persons, or PEPs, in an effort to stem illicit money flows, but President Jacob Zuma is being lobbied not to sign it into law.

A PEP is someone with a high level of political influence. It extends beyond the office bearers themselves to the immediate families of people regarded to have access to public money. The Financial Intelligence Centre Amendment Act (Fica) puts the onus of monitoring dodgy-looking transactions onfinancial institutions.

But South Africa seems intent on playing a dangerous game of chicken with the credibility of our financial system.

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The global regulation around PEPs has its genesis in the early '90s and Nigerian dictator Sani Abacha's pillaging of that country's economy. The Abacha lesson made authorities around the world pay attention, leading to global regulation designed to give greater financial-sector oversight of PEPs.

The pressure on the president is being led by Mzwanele Manyi, who heads the Progressive Professionals Forum, which says the legislation is unconstitutional.

Manyi maintains that the legislation fails to recognise the constitution as the final arbiter, undermines the privacy provisions in the Bill of Rights, freedom of association and the right to free economic activity. Rubbish. Anyone found wanting in terms of the law would have access to the courts.

More relevant is the concern by the Black Business Council, which says the regulation will treat its members, many of whom do business with the government, with suspicion, merely by association.

While the legislation will identify both sides of a corrupt transaction, those doing legitimate business with the state should have nothing to fear.

Another argument which does not hold water is that banks should not be "prosecutors, judges and executioners and do not have the moral authority" to be entrusted with oversight. The regulation does nothing of the kind. It requires banks to freeze accounts if there are suspicious transactions but does not give them prosecutorial power.

Objections to the law are curiously timed around the troubles the Gupta family and their associate companies are having with banks.

Oakbay CEO Nazeem Howa said the group remained open to taking legal action against financial services companies which he claimed had provided no clarity on why bank accounts connected to the group and its directors were frozen.

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Challenged on why it had not gone to the courts but rather chosen to rely on political connections to force an inquiry into banks, Howa argued that transparency was in the interests of all South Africans.

But no bankers worth their share options will turn away business unless they feel compelled, either from a regulatory or reputational basis, to do so.

The battle is divisive and is leaving ANC stalwart and businessman Sipho Pityana isolated as he seeks to expose the considerable vested interests that stand to benefit from the law not being signed as crony capitalism at the expense of the national good.

Tightening Fica regulation and putting banks as watchdogs for the state is all well and good, but who will do the actual policing?

Since the destruction of the Scorpions, the Hawks have hardly shown themselves to be beyond political interference and the fact that the South African Revenue Service's investigative capacity has been denuded raises even more questions about whether any PEP, perp or anyone with a suitable acronym would have anything to worry about in the first place.

Whitfield is an award-winning financial journalist and public speaker