NON-COMPLIANT NONPROFIT ORGANIZATIONS ARE A NATIONAL RISK 

Cuma Pantshwa 

• The Department of Social Development (DSD) is taking significant steps to protect national security by deregistering nonprofit organizations (NPOs) that fail to comply with legal standards.
• This effort comes in response to emerging risks such as money laundering and terrorism financing, which can be exploited by non-compliant NPOs.
• The introduction of advanced technologies like the Integrated Justice System (IJS) aims to improve the coordination of criminal justice efforts, enhancing detection and prevention of crime. 

The Department of Social Development (DSD) is taking decisive action to safeguard national security by deregistering and cancelling nonprofit organisations (NPOs) that fail to comply with legal requirements. These efforts are part of a broader mandate to ensure that NPOs uphold strong governance, transparency, and accountability in accordance with both national and international regulations.

Under the Financial Action Task Force (FATF) mutual evaluation, the necessity for strict enforcement of the Nonprofit Organisations Act (NPO Act) has become clear. This is particularly critical following the introduction of the amended General Laws (Anti-Money Laundering and Anti-Terrorism Financing) Amendment Act (GLAA). The failure to deregister non-compliant NPOs poses significant risks, as these organisations may become vulnerable to exploitation by criminals for activities such as money laundering and terrorist financing.

South Africa’s government monitors criminal activity and trends through emerging technologies such as the Integrated Justice System (IJS). The IJS’s role is to modernise the criminal justice system, transforming it into a more efficient and effective mechanism for combating crime and enhancing public safety. By leveraging technology to integrate the various components of the criminal justice system and the social cluster, the IJS enhances operational efficiency, promotes inter-departmental collaboration, and improves public safety.

The DSD is responsible for monitoring compliance with the NPO Act, ensuring that organisations adhere to its provisions, particularly regarding annual reporting. The failure to submit required annual reports has become a central concern. NPOs that neglect these responsibilities will be removed from the NPO Register, as stipulated in Section 21(1) of the NPO Act.

“In this context, non-compliant NPOs represent a tangible national security threat. Not only do they undermine the integrity of the nonprofit sector, but they also create opportunities for criminal elements to exploit these gaps. By modernising the criminal justice system and enforcing stricter regulations, the department aims to mitigate these risks and protect the country’s security interests, as well as the lives of vulnerable individuals,” said Mr Unathi Ngumla. He further emphasised that the deregistration of non-compliant NPOs is not just an administrative action, but a critical measure to ensure that South Africa’s nonprofit sector remains free from exploitation and aligned with global anti-money laundering and anti-terrorism standards.

By leveraging technology, the IJS aims to create an interconnected, end-to-end process that facilitates better coordination, faster responses, and improved outcomes in the fight against criminal activity. The core of the IJS lies in its ability to electronically enable and integrate the various data from different government departments and agencies, ensuring seamless information flow across all stakeholders to combat organised crime, such as drug trafficking and human trafficking, which often require coordinated responses and multisectoral collaborative efforts.

Speaking on the capabilities of technology and data exchange, Ms Mapaseka Nkethoa said, “The aim is to improve our detection of criminal activity as well as speed up service delivery. We have the systems to do this, such as surveillance systems, real-time data and data analytics. Hence, the department plays a critical role in the social and criminal justice clusters in the fight to reduce crime and corrupt NPOs.”

Furthermore, she explained that cybercrime has emerged as a significant challenge in the digital age. The IJS directly addresses this threat by improving ICT infrastructure and integration. With the rise of cybercrime, ranging from online fraud to hacking and identity theft, the IJS ensures that law enforcement and other bodies have the necessary tools to investigate and prosecute these crimes effectively. Enhanced cybersecurity protocols and the integration of digital forensics capabilities enable agencies to gather evidence and track cybercriminals more effectively, thus strengthening overall security and reducing the opportunities for cybercriminals to exploit vulnerabilities. With a particular emphasis on fighting corruption and tackling crime in the country, the IJS contributes to a safer and more secure environment by creating systems that are not only responsive but also proactive in preventing and addressing criminal behaviour.

The deregistration of non-compliant nonprofit organisations is essential for maintaining the integrity and effectiveness of the nonprofit sector. The department will deregister organisations over a period of 6 to 12 months. This process is designed not to cause alarm within the sector but to give other NPOs the opportunity to respond to the call to submit their annual reports. The department will continue to support NPOs by creating an enabling environment for them to operate effectively and efficiently.