Financial Crime World

South Africa’s Financial Crime Risk Assessment: A Threat to the Nation’s Economy

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The high crime rate in South Africa poses a significant threat to the country’s society, citizens, and economy. According to a recent report by the Financial Action Task Force (FATF), financial crimes consume approximately 19% of the country’s GDP.

The Nature of Financial Crimes in South Africa

  • Proceed-generating crimes: More than half of all reported crimes in South Africa are proceed-generating crimes, which violate citizens’ lawful rights and livelihoods for the purpose of obtaining illicit proceeds.
  • Domestic crimes: Tax evasion and fraud, corruption and bribery across various entities, private procurement fraud, digital banking fraud, cybercrimes involving virtual assets, drug trafficking, and environmental crimes such as poaching and illegal mining are some examples of domestic proceed-generating crimes in South Africa.

The Role of International Criminal Networks

  • Transit route: South Africa serves as a transit route for illicit goods and human smuggling.
  • Haven for laundering illicit proceeds: The country is also a haven for laundering illicit proceeds through the abuse of legal persons and corporations.

Combating Financial Crimes in South Africa

Implementing Effective Anti-Money Laundering (AML) and Counter Terrorism Financing (CFT) Measures

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  • Compliance with AML/CFT obligations: All stakeholders in the economy must comply with their AML/CFT obligations to prevent criminals from profiting from their illicit activities.
  • Understanding risk exposure: It is essential for every stakeholder to understand their risk exposure and implement adequate mitigating measures to prevent financial crime from thriving in South Africa.

The Importance of Compliance

  • Failure to comply: When one entity fails to comply with its AML/CFT obligations, it can facilitate and motivate the commission of more crimes, exposing other entities to illicit money that is laundered, used, and enjoyed by criminals.
  • Responsibility: Every stakeholder in the economy must not only comply with legal requirements but also understand their risk exposure and implement mitigating measures to prevent financial crime from thriving in South Africa.