President Jacob Zuma sent an anti-money-laundering bill that would have increased scrutiny of the bank accounts of "prominent individuals," including himself, back to parliament on Tuesday, saying it might not be constitutional.
In a statement, Zuma's office said the Financial Intelligence Centre Amendment (FICA) bill was "very important and pressing" but it was concerned about some of its aspects, particularly those relating to "warrant-less searches."
The bill, which is meant to bolster the fight against global financial crime by making it easier to identify ultimate owners of companies and accounts — including those of "domestic prominent influential persons" — was passed by parliament in May.
That left Zuma's signature as the final hurdle to it being signed into law. In its definition of "influential person," the FICA bill specified the president and deputy president, ministers, provincial premiers, judges and generals.
At a meeting with Zuma in September, the Black Business Council (BBC), a lobby group trying to boost black ownership of the economy, urged him not to sign the bill.
Its reasons were not made clear at the time although South African media speculated that its stance might be related to a fight between the Treasury, which sponsored the legislation, and the Guptas, a family of controversial businessmen close to Zuma.
South Africa's leading four banks have severed their ties with the Guptas over the last year. They have refused to make public their reasons but analysts say their action was probably prompted by concerns about reputational risk.
A spokesman for the BBC did not respond to email or telephone requests for comment. Zuma's spokesman denied any motive on Zuma's part other than his desire to ensure all laws he signed were constitutional.
The Guptas have also denied any wrongdoing or backroom lobbying.
Cas Coovadia, managing director of the Banking Association of South Africa, said the bill was important for the global standing and integrity of South Africa's banking system, and urged parliament to pass it again as quickly as possible.
"We will deal with it in parliament again if need be," he said. "We would like to expedite this."
The bill will now pass back to the parliamentary committee that drafted it, although it is not yet clear whether they will make changes.