Banking Council: Section 7
Report on discussion with Mr Stuart Grobler of the Banking Council

On 16 February 1998 Mr Smit had a discussion with Mr Stuart Grobler representing the Banking Council ("the Council") concerning the reporting duty created by section 7 of the Prevention of Organised Crime Act, I 998 ("the Act").

Mr Grobler indicated that there are two reasons for the Council's suggestion that every person should have a duty to report suspicious transactions: The first is that it will then be easier to identify the person who is under an obligation to report. In the case of a bank the manager will only he able to report what is being reported to him or her. He or she can therefore not be held liable for a failure to report information which the frontline staff had failed to report.

The second reason advanced by Mr Grobler is that with the reporting duty only applying to the business community a lot of valuable information will slip through the net. He referred to the example of civil servants or persons working for NGO's who may in the course of performing their duties, obtain information on suspicious activities.

Mr Grobler indicated that it is not possible to state at which level in a bank the responsibility to report should be pegged as this will be dependant on the information obtained from frontline staff and other sources within the bank. It would further be impossible to develop a generic description of the reporting officer which will suit all banks as well all other persons and business organisations that are currently subject to the reporting duty. A further problem with identifying a specific office or person within a bank to carry the duty to report is that a bank can shield itself from its responsibility to report by controlling the flow of information to that person or office.

Mr Grobler acknowledges that a requirement that every person, or at least every employee of a bank. must report suspicious transactions would mean that the banks would have to come to some sort of working arrangement with the law enforcement authorities concerned as has happened in the United Kingdom.. This will be necessary in order to ensure that individual employees are not required to interrupt their work in order to tile a report each time that suspicious information comes to their attention, a prospect which could seriously disrupt the work of a bank or any other business.

He further states that a requirement that all employees of a bank must report suspicious information will shift the responsibility to report from the bank as an organisation to the employees as individuals who do not have the collective knowledge of the bank through all its employees.

Mr Grobler stated that he is not concerned with the possibility that disgruntled employees may make malicious reports which could cause problems for the banks. He refers to the example of reports made by informants to the Commissioner for Inland Revenue which has the potential of causing much more serious problems for an employer.

As Mr Grobler's main concern is that too much valuable information will be lost if only the business community is under an obligation to report information, he suggested that consideration be given to leaving section 7 in its current form and to introduce further provisions to create a similar duty for other persons to report suspicious information.