Terrorism financing: The perfect ruse for a state security clampdown on NGOs and churches

15 Oct 2023

Registered non-profits (including churches) must now annually submit additional information to the Department of Social Development (the exact nature of which will be determined in consultation with the Financial Intelligence Centre and the minister of finance) about their office bearers, control structures, management and operations.

The State Security Agency (SSA) has proposed legislation requiring security clearance for anyone wanting to “establish and operate” a non-government or faith-based organisation (NGOs and FBOs).

This potentially gives the SSA the power to force people to resign from an organisation, or even to shut down that organisation. Authorities say it’s a necessary step because South Africa was greylisted after failing to meet international standards set to curb terrorism financing (a crime which NGOs and churches can potentially facilitate).

But the move is questionable: For one, legislative reforms aimed at removing SA from the greylist have already been made, with both the Hawks and the Financial Intelligence Centre gaining greater powers to investigate NGOs and FBOs. And then there’s the SSA’s reported history of sabotaging civil society.

Widespread backlash from civil society has erupted against the security clearance provision contained in the General Intelligence Laws Amendment Bill of 2023 (Gilab), submitted to Parliament in August. Gilab was meant to address malfeasance at the SSA, including political factionalism, irregular expenditures and poor oversight; these problems were identified during the Zondo Commission of Inquiry into State Capture, which also heard testimony of the SSA actively monitoring and sabotaging civil society organisations deemed “hostile” to the regime.

Security clearance is granted or denied after the SSA conducts a vetting investigation (in terms of the National Strategic Intelligence Act). Vetting is a risk assessment normally reserved for government employees or contractors with access to sensitive government information.

The process gives the SSA access to any personal information they deem relevant (such as health and banking records), and can include the interception of private communications.

However, the Minister in the Presidency responsible for the SSA, Khumbudzo Ntshavheni, recently assured civil society that only those posing a threat to “national security interests” would be vetted. She maintained that such vetting was necessitated by South Africa’s placement on a “greylist” of countries making insufficient efforts to curb terrorism financing.

Questionable statements

According to EWN, which first reported the minister’s statements, Ntshavheni said Gilab was in line with laws of democratic countries like the United States (US) and the United Kingdom (UK).

The minister’s statements, especially on the use of security vetting in response to the greylisting, are particularly questionable.

Ntshavheni’s claims relate to an evaluation report from the international Financial Action Task Force (FATF), a watchdog body that sets international standards for in-country legislation to curb terrorism financing. In October 2021, the FATF published a report following its investigation of South Africa’s measures to stymie terrorism financing. A key finding included the country’s weakened institutional capacity to address such financing following State Capture.

The 2021 FATF report was produced in cooperation with South Africa, and contained details of the country’s performance measured against 40 standard FATF recommendations (to which all countries strive to adhere). The report put forth 67 recommended actions specific to SA to remedy shortcomings.

The country had a year to implement the plan, but failed and was greylisted in February this year. (Greylisting is an unofficial reference to a collection of countries that the FATF has placed under “increased monitoring”, and which are working with the FATF to better meet its standards.)

Of the 40 recommendations, number eight deals specifically with strengthening laws that counter the abuse of non-profit organisations (including churches) to facilitate terrorism financing. The 2021 FATF report concluded that recommendation eight had not been satisfied, since South Africa had “not yet done an assessment of their broader NPO sector to identify those organisations, based on their characteristics or activities, that put them at risk of Terrorist Financing abuse” and had “no capacity to monitor or investigate” such NPOs once identified.

To explicitly address these issues, South Africa enacted two successive laws last year: The General Laws (Anti-money laundering and combating terrorism financing) Amendment Act 22 of 2022, and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act 23 of 2022.

Taken together, the acts (22 and 23) have strengthened the Hawks’ and the Financial Intelligence Centre’s (FIC) powers to investigate persons and organisations suspected of involvement in terrorism financing.

In particular, Act 22 amends the 1997 Non-profit Act; organisations donating to entities outside South Africa and who provide “humanitarian, charitable, religious, educational or cultural services outside of the Republic’s borders” must register with the Directorate of Non-profit Organisations within the Department of Social Development (DSD).

Registered non-profits (including churches) must now annually submit additional information (the exact nature of which will be determined in consultation with the FIC and the minister of finance) about their office bearers, control structures, management, and operations to the DSD.

Additionally, Act 22 introduces several criteria for the disqualification of NPO office bearers. Some of these include being an unrehabilitated insolvent and committing various offences governed by a slew of financial laws. Theft, fraud, forgery and perjury can all prohibit one from taking up a position on an organisation’s board.

Currently, South Africa still has to address eight “strategic deficiencies” to get off the greylist. For instance, the country needs to demonstrate a “sustained increase in law enforcement agencies’ requests for financial intelligence from the FIC” during investigations into terrorism financing. The country must also improve risk-based supervision of Designated Non-Financial Businesses and Professions (such as doctors, lawyers, casinos, and insurance brokers.) Non-profits are not mentioned.

Acts 22 and 23 alone do not preclude the SSA’s involvement in terrorism financing investigations into NGOs and FBOs; it falls squarely within the agency’s mandate. It is, however, unusual to apply vetting during such investigations, and subsequent claims that Gilab’s vetting provisions are in line with similar laws in the US and UK are false.

In the US, vetting applies to prospective federal employees or contractors to the federal government who will, as part of their government job, have access to sensitive government information or locations. The same practice applies in the UK.

Vetting is essentially a risk assessment: can an employee be trusted to manage sensitive material, or are they likely to be blackmailed, bribed, or to forget a briefcase with top-secret blueprints on the bus? Until now, in SA, vetting has served this same purpose; the process has never been used, as Gilab proposes, to sniff out potential terrorists.

Pre-emptive criminal investigation

Through Gilab, however, it seems the SSA wants to repurpose vetting into a type of pre-emptive criminal investigation. Normally, if an organisation or person is suspected of involvement in terrorism financing, state law enforcement would investigate it as a crime, with the administration that goes with that – a case number, court orders, evidence preservation, and so forth.

On the other hand, the vetting proposed in Gilab would be a response to a potential threat to national security (as identified and defined by the SSA). However, the agency has the power to classify all information related to its operations – including the reasons for a vetting investigation and information about the procedures and outcomes related to such an investigation.

This creates the potential for the SSA to operate outside the constraints of the judicial system by removing, for the vetting subject, all statutory protections that a legal criminal investigation affords a person accused or suspected of criminal involvement. As Gilab stands now, an employee or board member at an NGO of FBO could potentially be forced to resign as a result of the classified details of a vetting investigation.

The basis for such a vetting investigation is also unclear, creating additional room for abuse.

While Act 22 makes explicit who is unfit to serve on a non-profit’s board, factors that constitute a threat to “national security interests” are ill-defined in Gilab. Writes constitutional expert Pierre de Vos: “If passed, it [Gilab] will vastly expand the categories of people subject to security clearance, and will grant additional discretionary powers to the minister, often in vague and general terms.”

New legislation to curb terror financing has already kicked in, tightening controls on non-profits and churches. If Gilab becomes law, state security forces could effectively launch extra-legal investigations and shut down organisations based on vague conceptions of national security. DM

Heidi Swart is a senior investigative journalist specialising in intelligence and security matters. She is currently the research and journalism coordinator for Intelwatch, a non-profit organisation based in South Africa and dedicated to strengthening public oversight of state and private intelligence actors in Africa and around the world.

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South Africa

Questionable statements

Pre-emptive criminal investigation