Money Laundering Methods in South Africa

Introduction

Money laundering is a significant concern in South Africa, with various methods being used by criminals to conceal the origins of their illicit funds. This article discusses some of these methods and highlights examples of how cash is laundered.

Front Businesses

• Definition: Front businesses are legitimate operations established to facilitate money laundering.
• Method: The proceeds of crime are used to fund business activities or co-mingled with the legitimate proceeds of the business.
• Examples: Luxury goods, vehicles, and real estate are bought using illicit cash.

Cash and Currency

• Definition: Criminals generate cash proceeds from offenses like cash heists or drug trafficking.
• Method: Substantial amounts of cash are transferred or spent without using the formal financial system.
• Examples:
  • Cash is strapped to bodies or hidden in luggage for physical conveyance within South African borders or across its borders.
  • Automatic teller machines (ATMs) and automatic vending machines selling cellphone products have been used to place cash amounts into the financial system.

Abuse of Financial Institutions

• Definition: South Africa’s well-developed financial system is abused by criminals to launder and invest their ill-gotten gains.
• Method: Money is deposited into bank accounts using false identification documentation or opened in the names of front companies.
• Examples:
  • Laundering takes place in legal as well as illegal gambling institutions, where criminals or their assistants buy gambling chips or credits in cash after a short period of gambling.
  • Casinos have changed their practices to prevent laundering by refusing to issue cheques when chips were bought for cash and instead repaying the gambler in cash.