South Africa’s Financial Sector Under Siege: Fraudulent Activities Threaten Economy and Society

The Alarming Reality of Crime in South Africa

• A staggering 19% of South Africa’s GDP is consumed by crime, with over half of all reported crimes being proceed-generating crimes that target the country’s citizens and economy.
• These crimes include tax crimes, corruption, bribery, Ponzi schemes, digital banking fraud, cybercrimes involving virtual assets, drug trafficking, and environmental crimes such as poaching and illegal mining.

The Role of International Criminal Networks

• South Africa’s critical role as a financial hub in southern Africa makes it vulnerable to international criminal networks that use it as a transit route for illicit goods and human smuggling.
• These networks also launder illicit proceeds through South African legal persons and corporations.

The Importance of Anti-Money Laundering (AML) and Counter Terrorism Financing (CFT) Measures

• Implementing AML/CFT measures is key to preventing criminals from profiting from their illicit activities and financing further crimes or terrorist plans.
• Every stakeholder in the economy must comply with their legal AML/CFT obligations, understand their risk exposure, and implement adequate mitigating measures to construct a trustworthy ecosystem.

The Consequences of Neglecting AML/CFT Obligations

• Failure to do so can facilitate and motivate the commission of more crimes by exposing entities to illicit money.
• The consequences are severe, as evidenced by the FATF report’s findings.

Building a Safer Economy and Society

• By working together to prevent crime and promote transparency in South Africa’s financial sector, stakeholders can help build a safer economy and society for all citizens.