A new bill being fast-tracked by National Treasury will grant the Financial Intelligence Centre (FIC) the authority to conduct lifestyle audits on South African citizens.
The South African Revenue Service (Sars) already has these powers and frequently uses them to ascertain whether your standard of living matches your declared income.
Under the General Laws Amendment Bill of 2025, the FIC will have its own powers to conduct lifestyle audits, not just in response to suspicious transactions, but as a proactive measure.
The bill also requires banks and other financial institutions to keep records for seven years instead of the current five.
If passed in its current form, the FIC would have the power to initiate lifestyle audits at the request of an organ of state, a public entity, or municipality – provided it reasonably believes that entity has an interest in the information.
The FIC would have the power to access any database held by a municipality or public entity.
The bill was gazetted in January for public comment.
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Response
A public participation campaign by Dear South Africa has attracted overwhelmingly negative comment from South Africans, mainly because it is perceived to infringe constitutional rights to privacy and brings SA a step closer towards a police state under the guise of combatting money laundering and terrorism financing.
The Law Society of South Africa (LSSA) has raised concerns in its submissions, particularly around amendments affecting legal practitioners, such as potential conflicts with legal professional privilege, reporting obligations under targeted financial sanctions, and disproportionate burdens on smaller practices.
While supporting the overall objective of combatting money laundering and terrorism financing, the LSSA questions how client details, property information, or representation rights would be handled if a client is on the Targeted Financial Sanctions List, potentially hindering a legal practitioner’s duty to represent clients without compromising privilege.
Others, such as Corruption Watch, have adopted a more neutral to positive stance on the proposed bill, which many see as necessary to stay in the good graces of the Financial Action Task Force (FATF), which last year removed SA from its grey list for progress made in tightening anti-money laundering (AML) and Countering the Financing of Terrorism (CFT) practices and regulations.
The new bill being promoted by National Treasury is deemed necessary to plug some vestigial weaknesses in the law.
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The powers
The FIC will have the power to share your personal information with other government departments, including the Border Management Authority and the Public Procurement Office.
The proposed bill will also amend the Nonprofit Organisations Act of 1997 to allow for closer monitoring of NPOs and impose administrative penalties for contraventions of the law.
The NPO directorate, which falls under the Department of Social Development, will be transformed from a registration to a monitoring and enforcement body armed with powers to impose penalties and refer NPOs for criminal investigation.
The bill proposes amending the Companies Act to allow for the deregistration of companies that fail to submit securities registers on time, with new powers for the Companies and Intellectual Property Commission (CIPC) to impose administrative penalties.
“This [bill] moves the state from a reactive role – investigating specific crimes – to a proactive surveillance role, where your lifestyle itself can trigger a government probe,” says Dear South Africa.
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No direct new powers for Sars
Sars has the authority under tax legislation to conduct lifestyle audits as an enforcement tool to reconcile declared income with actual living standards and assets, especially when discrepancies arise.
This has been in practice for years, with Sars often issuing estimated assessments where mismatches suggest undeclared income.
The new bill does not grant Sars new direct powers for lifestyle audits. Instead, it statutorily empowers the FIC to conduct them proactively, including at the request of organs of state, public entities, or municipalities where there’s a reasonable belief of relevance.
The FIC can then share findings with Sars and other organs of state, such as the National Prosecuting Authority.
This creates a broader, inter-agency mechanism.
The FIC gains explicit audit authority, while Sars benefits indirectly through enhanced data sharing and potential referrals.
The change aims to strengthen the state’s ability to probe suspected violations of AML/CFT regulations in a proactive way.
Members of the public have until 13 February to comment on the bill.
This article was republished from Moneyweb. Read the original here.
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