SOUTH AFRICA’S SANCTIONS AND FINANCIAL CRIME EPIDEMIC TAKES TOLL ON ECONOMY

The Alarming Reality of Crime in South Africa

South Africa’s crime rate has reached alarming levels, consuming approximately 19% of the country’s GDP. This staggering statistic highlights the need for immediate action to combat the growing problem of financial crime.

The FATF Mutual Evaluation of South Africa 2021: Key Findings

• Over half of reported crimes are proceed-generating, indicating a significant link between crime and economic activity.
• Tax evasion, corruption, and digital banking fraud are among the main domestic offenders contributing to this trend.

The Role of International Criminal Networks

As a financial hub in southern Africa, South Africa serves as both a market and transit point for illicit goods, including human smuggling. Its legal persons and corporations are exploited for laundering illicit proceeds, further exacerbating the problem.

The Importance of AML/CFT Measures

Implementing effective Anti-Money Laundering (AML) and Counter Terrorism Financing (CFT) measures is crucial to combat crime in South Africa. All stakeholders in the economy must comply with their AML/CFT obligations, understand their risk exposure, and implement mitigating measures to construct a trustworthy ecosystem.

The Consequences of Negligence or Failure to Comply

The consequences of negligence or failure to comply are severe, as it facilitates and motivates more crimes by exposing entities to illicit money laundered, used, and enjoyed by criminals. In South Africa’s fight against sanctions and financial crime, effective AML/CFT implementation is key to stopping and reducing crimes, protecting citizens’ rights and livelihoods, and safeguarding the economy from further harm.