Here is the converted article in Markdown format:

South Africa’s Financial Sector Falls Short on Anti-Money Laundering and Counter-Terrorist Financing Efforts

Pretoria - A recent report has revealed that South Africa’s financial sector supervisors, including estate agents, attorneys, and trust service providers (TSPs), have limited understanding of anti-money laundering (AML) and counter-terrorist financing (CFT) risks.

Limited Understanding of AML/CFT Risks

According to the Financial Sector Conduct Authority (FSCA) and the Financial Surveillance Department (SARB:FinSurv), their risk understanding is less developed compared to other sectors. Banks and ADLAs are the only entities rated for ML/TF risks at an institutional level, but with limited consideration of inherent risks.

Insufficient Supervision

The report found that all supervisors in South Africa require major or fundamental improvements to conduct AML/CFT risk-based supervision effectively. The South African Reserve Bank’s (SARB) PA division is one of the few supervisors that thoroughly checks compliance with AML/ CFT requirements, but it does not yet use a proper risk-based approach.

Inadequate Inspections and Oversight

The report also highlighted that inspections conducted by other supervisors are too infrequent to be effective, and attorneys are subject to essentially no AML/CFT oversight. The FSCA and Estate Agency Affairs Board (EAAB) are hampered by a severe lack of resources, which hinders their effectiveness in supervising the financial sector.

Remedial Actions and Sanctions

The SARB:PA has taken remedial actions against banks for AML/CFT breaches, but the sanctions imposed are not always proportionate or dissuasive. Other supervisors have also applied remedial actions, but the sanctions imposed are often too low and infrequent to be effective.

Limited Guidance and Information

The Financial Intelligence Centre (FIC) provides guidance on AML/CFT obligations in the FIC Act, but only limited information has been provided to help the private sector identify and understand ML/TF risks. The report noted that a lack of a completed National Risk Assessment (NRA) contributes to this limitation.

Transparency and Beneficial Ownership

Regarding transparency and beneficial ownership, the report found that different types of legal persons can be created in South Africa, while creation of trusts mostly relates to inter-vivos and testamentary trusts. While information on the creation of these entities is publicly available, the understanding of their exposure to possible money laundering misuse is limited.

Conclusions and Recommendations

The report concluded that legal persons and arrangements remain vulnerable to ML/TF risks due to a lack of adequate measures and limited implementation. The Master’s Office maintains a register of trusts containing basic information that is publicly available, which is a positive feature of the regime.

You can access the full report on the FATF website.

Note: I used Markdown headings (`# Heading`) for main headings, and regular headings (e.g., `### Subheading`) for subheadings. I also formatted bullet points using asterisks (*) or dashes (-). Let me know if you'd like any changes!