South Africa Faces a Rising Tide of Financial Crime: A Wake-Up Call from FATF

The Financial Action Task Force (FATF) greylisting of South Africa (SA) in 2023 served as a stark reminder for many about the prevalence and consequences of financial crime in the country. Here’s what you need to know about financial crime in South Africa, its impact, and efforts to combat it.

Financial Crime in South Africa: An Overview

Though crime is not an unfamiliar concept for South Africans, financial crime may be. However, financial crime is a significant problem in SA and is on the rise. This section explores financial crime in South Africa and its various manifestations.

Fraud: A Growing Concern in South Africa’s Financial Sector

Fraud is a common form of financial crime, and it encompasses a wide range of unlawful activities. The following are some types of fraud prevalent in South Africa:

Identity theft
Digital banking fraud

The latest statistics from the South African Banking Risk Information Centre (SABRIC) and Southern African Fraud Prevention Services (SAFPS) show a worrying trend. Digital banking fraud, particularly through techniques such as ‘vishing’ and ‘phishing,’ is particularly damaging, with fraudsters deceptively obtaining personal information from victims and subsequently looting their bank accounts.

Money Laundering: A Threat to South Africa’s Financial System

Money laundering is another major financial crime concern in South Africa. Criminals exploit the country’s position as the financial hub of sub-Saharan Africa by using various techniques to disguise the origins of illicit funds. South Africa’s historical connections to organized crime and the drug trade have fostered an environment ripe for financial criminals, with these networks infiltrating legitimate businesses and laundering money through them. With one of the highest organized crime rates in the world, according to the Africa Organized Crime Index 2023, SA ranks third.

Combating Money Laundering: The Role of the Financial Intelligence Centre

To counteract these criminal activities, South Africa’s Financial Intelligence Centre (FIC) has set guidelines through the FIC Act, requiring all Accountable Institutions (AIs) to follow specific procedures to minimize the risk of money laundering. These measures include identifying and assessing the risk of customers and maintaining a Risk Management and Compliance Programme (RMCP) outlining the anti-money laundering processes in the business.

Corruption: A Persistent Issue in South Africa

Corruption, another form of financial crime, is a long-standing challenge in SA. With a low score in the 2023 Corruption Perceptions Index and high-profile corruption scandals like State Capture, it is no surprise that corruption exists within the country’s financial sector. This section examines the impact of corruption on South Africa and efforts to fight it.

Technology’s Role in Fighting Financial Crime in a Modern South Africa

In the face of growing financial crime, technology has emerged as a crucial tool in mitigating risks and securing the financial sector. Solutions like DocFox’s watchlist service enable ongoing, reliable, and efficient screening of customers against international sanctions and watchlists, thereby reducing the risk of doing business with high-risk individuals and entities.

Stay informed about the latest news, developments, and best practices on Financial Crime, Anti-Money Laundering (AML), and Financial Intelligence Centre Act (FICA) compliance. Subscribe to our Newsletter today.