SOUTH AFRICA CRITICISED FOR INEFFECTIVE MONEY LAUNDERING SYSTEM

Johannesburg - Money Laundering Assessment Reveals Significant Shortcomings

A recent assessment by the International Monetary Fund (IMF) has highlighted significant shortcomings in South Africa’s legal framework to combat money laundering and terrorist financing. While the country’s legal framework is solid, its implementation leaves much to be desired.

South Africa’s Vulnerability to Money Laundering

According to the IMF assessment, which was conducted in November 2019 and adopted by the Financial Action Task Force (FATF) in June 2021, South Africa’s financial sector is vulnerable to money laundering and terrorist financing due to its status as a regional financial hub for sub-Saharan Africa. The country’s banks offer a diverse range of products, making them a key entry point for illicit funds.

Key Findings

Failure to pursue serious cases: Law enforcement agencies lack the skills and resources to proactively investigate money laundering or terrorist financing.
Lack of skills and resources: Proactive identification and investigation of laundering networks and professional enablers is not occurring effectively.
Ineffective use of financial intelligence: The report highlights the need for better use of financial intelligence to combat money laundering and terrorist financing.
Limited availability of beneficial ownership information: Efforts to prevent false or undeclared cross-border currency movements require major improvement.

Call to Action

South Africa needs to take concrete steps to address these shortcomings, including:

Improving the use of financial intelligence
Increasing resources for law enforcement agencies
Closing gaps in sectoral coverage
Enhancing collaboration with international partners
Implementing a more effective risk-based approach by businesses and supervisors.

South Africa’s Role in Combating Global Financial Crimes

With its status as a G20 economy, South Africa has a critical role to play in combating global financial crimes. It is essential that the country takes concrete steps to address these shortcomings and effectively implements measures to combat money laundering and terrorist financing.

South Africa’s Money Laundering Shortcomings

Failure to pursue serious cases of money laundering
Lack of skills and resources for proactive investigation of laundering networks and professional enablers
Ineffective use of financial intelligence
Limited availability of beneficial ownership information
Inadequate risk-based approach by businesses and supervisors
Gaps in sectoral coverage