Is South Africa winning the anti-money laundering war? The Financial Intelligence Centre (FIC) would like us to trust that this is the case. In its latest annual report, released at the end of September, the state-owned body declared that it had recovered more than R5.8-billion in criminal proceeds in the last financial year alone, partly owing to stronger powers that were enabled by legislative changes in late 2022.
The FIC is one of several government entities that were identified in the Zondo Commission report as needing to up their game in combating financial crimes like money laundering and illicit financial flows. This was in the context of evidence noted by the commission that points to systemic money laundering schemes operated in favour of the Gupta enterprise during the period under investigation by the commission, that cost the public purse tens of billions of rands. Evidence by Shadow World forensic investigator Paul Holden showed that now-struggling Transnet was the biggest loser in the state capture project, having seen R40-billion flow down the drain, while he put Eskom’s loss at around R6.9-billion.
“The FIC’s primary objectives are to identify the proceeds of crime and assist in combating money laundering, terrorist financing and proliferation financing … [and] to produce financial intelligence reports … [that] are shared with law enforcement, prosecutorial authorities and other domestic and foreign competent authorities who use the intelligence in their evidence gathering, investigations, prosecutions and applications for asset forfeiture,” the organisation says.
“Between 1 April 2022 and the end of March 2023, the FIC produced 3 424 intelligence reports upon request and based upon its own analysis. Most of the intelligence produced related to money laundering, fraud, bribery and corruption.”
The centre further records that it registered over 45 000 businesses and sectors and filed more than 5.3-million regulatory reports. “Approximately 558 000 were suspicious and unusual transaction reports, 4.2-million were reports on transactions exceeding the R49 999.99 threshold. In addition, more than 500 000 reports were received on electronic international funds transfers exceeding the threshold of R19 999.99. The latter reporting stream came into effect on 1 January 2023.”
In its statement detailing the year it has had, the FIC acknowledges that the enactment of the General Laws Amendment Act (GLA), which came into effect early this year, boosted its capacity as a regulatory body. “Supported by legislative and regulatory changes, the 2022/23 financial year saw the FIC fortified to enhance its service and product delivery, and strengthening its role in the fight against financial crime.
The Financial Intelligence Centre Act (FIC Act) is one of five amended in the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, and these amendments have given the organisation added momentum.
“Significantly, the amendments also ushered in a new division within the FIC aimed at strengthening measures to combat money laundering, terrorist financing, and proliferation financing. The new shared forensic capability will be responsible for producing forensic evidence on the results of the analysis it produces that could be used as expert testimony in cases where this may be relevant in court proceedings.”
Technical amendments and new additions to the fold
The enhancement of its powers and scope of work also came in handy. Amendments to the schedules of sectors and business types required to register and comply with the FIC Act came into effect on 19 December 2022. There were technical amendments and new sectors were brought into the FIC Act fold, it reported in the statement.
“The amendments to the FIC Act are technical in nature and do not substantially change the principles on which the customer due diligence provisions are based. “
However, the amendments do result in the establishment of a stronger AML, CFT, and CPF regulatory framework and expand the objectives of the FIC:
- To include the identification of persons involved in money laundering activities, financing of terrorism and related activities as well as proliferation financing activities.
- To produce forensic evidence relating to the flow of financial transactions.”
The extension of the centre’s powers enable it to:
- Enter into public-private partnerships for the purposes of achieving any of the objectives of the FIC.
- Request information or access to any database held by any organ of state as well as to have access to information contained in a register that is kept by an organ of state.
- Share information with the investigative division of the Auditor-General.
In a foreword to the report, Finance Minister Enoch Godongwana notes: “Our legislative regime and the implementation of measures for combating money laundering, terrorist financing and proliferation of weapons of mass destruction were found wanting by the Financial Action Task Force (FATF) in its most recent mutual evaluation of South Africa.
“The global anti-money laundering and combating of terrorist financing watchdog identified strategic deficiencies, which ultimately led to South Africa being grey-listed as a ‘jurisdiction under increased monitoring’. These deficiencies must be addressed by January 2025.”
