The Companies and Intellectual Property Commission (CIPC) has highlighted the importance to the country of its Beneficial Ownership (BO) register. From April 1, 2023, when the register was launched, until May 27 this year, the CIPC had received more than 3.2-million BO filings, of which more than 2.2-million were completed in the system, more than 500 000 had been amended to meet requirements and more than 8 000 had been assessed.

“BO compliance is more than a filing requirement; it is a transparency tool that identifies the real individuals behind companies, prevents fronting, corruption and money laundering and strengthens investor confidence,” explained the CIPC. It thus protects the integrity of the country’s financial system and ensures fair market competition.

“[The] BO automated register is an enhanced automated system of natural persons who ultimately own or exercise effective control over legal entities,” elucidated the commission. “The register is critical to the modern economy for promoting financial transparency, strengthening corporate governance, and reducing investment risk.”

It also assists law enforcement in investigating corruption, financial crimes, money laundering and terrorism financing. Creating and maintaining the BO register is a requirement of South Africa’s membership of the international Financial Action Task Force (FATF).

The country had now filled the gaps it had in its anti-money laundering and counter-terror financing frameworks. Consequently, it had been taken off the FATF’s grey list last October, and the EU’s high-risk list in January.

Being grey-listed had increased the transaction costs for businesses in South Africa, had driven up borrowing costs for both business and government, curtailed foreign investment and caused reputational damage to the country. Being removed from the grey list resulted in an improved economic prospect, including the restoration of financial credibility, reduced business costs and fewer transactional frictions.

“Compliance of entities is central to fostering a proactive ethical culture that prevents violations before they occur,” stressed the CIPC. “Companies must declare who owns or controls them by submitting an annual BO declaration to the Commission. To deter non-compliance, Section 214 of the Companies Act outlines criminal offences for false statements, reckless conduct, and non-compliance.”