Mastering Compliance: Unpacking the Legal Landscape of Beneficial Ownership in South Africa
New Regulations
As of 1 April 2023, South Africa has implemented new regulations regarding the disclosure of beneficial ownership of assets. These regulations, introduced through section 11A of the Trust Property Control Act 57 of 1988 (TPCA) and accompanying Regulations, aim to enhance transparency, combat money laundering and terrorism financing.
What is a Beneficial Owner?
In the context of trusts, the TPCA defines a beneficial owner as a natural person who directly or indirectly owns the relevant trust property, exercises effective control over trust administration, serves as a founder or trustee, or is named as a beneficiary in the trust's founding documents (trust deed). If a founder, trustee, or beneficiary is a legal person, partnership, or a person acting in terms of a trust instrument, the beneficial owner will be the natural person who directly or indirectly owns or exercises effective control over these legal persons. If the natural person is a minor, the prescribed information of their guardian must be recorded.
Who Has Access?
Access to beneficial ownership information is restricted to specific government bodies, including the National Prosecuting Authority, the Independent Police Investigative Directorate, State Security Agency, the Intelligence Division of the National Defence Force, the Special Investigating Unit, the South African Revenue Service (SARS), and the Financial Intelligence Centre. Additionally, individuals or entities entitled to access information under other national legislation may request access. Regulation 3E outlines the entities eligible for access and the process for obtaining it, with the Master having the authority to grant access to designated officials.
Electronic Register by the Master of the High Court
A crucial aspect of the new regulations is the establishment of an electronic register by the Master of the High Court. In terms of section 11A of the TPCA, trustees are obligated to submit detailed beneficial ownership information to this register and ensure that such information is kept up to date.
Consequences of Non-Compliance
Non-compliance with the regulations outlined in section 11A(1) of the TPCA is now an offense. Trustees failing to meet their obligations can face severe penalties, including fines of up to R10 million, imprisonment or both. This underscores the importance of trustees understanding and diligently adhering to their additional obligations to avoid significant legal consequences.
In conclusion, South Africa's recent regulatory changes regarding beneficial ownership disclosure reflect a proactive approach to address anti-money laundering and terrorism financing concerns. Trustees must navigate these new requirements with precision to ensure compliance and mitigate the risk of legal consequences.