Financial Crime World

Terrorist Financing (TF) National Risk Assessment Report

Introduction

The Terrorist Financing (TF) National Risk Assessment report aims to identify and assess the risks of terrorist financing in South Africa. This report takes into account various vulnerabilities, including structural elements, materiality, and sector-specific TF vulnerabilities.

Vulnerabilities

The following sectors and organizations are vulnerable to terrorist financing threats:

  • Non-Profit Organizations: Weak administrative and financial monitoring mechanisms make NPOs susceptible to TF threats.
  • Banks and Financial Institutions: Those operating in the virtual currency space are exposed to TF risks, as well as those with inadequate risk management systems.
  • Fintech Ecosystem: South Africa’s fintech sector, including crypto assets, presents TF risks due to its growing popularity and lack of regulatory oversight.
  • Crowdfunding Platforms: These platforms can be exploited for TF purposes if not properly monitored and regulated.
  • Proceeds-Generating Crimes: Business robbery and cash-in-transit heists may be linked to terrorist activity, providing a source of funding for extremist groups.

Risks

The report assesses the likelihood of funds or other assets being raised in South Africa and moved through or out of the country in support of terrorism as HIGH. The primary use of funds for TF in South Africa is linked to:

  • Domestic Violent Extremism: Right-wing extremism and sustaining the activities of a small group of IS sympathizers.
  • Sustaining Terrorist Activities: Funds are used to maintain and finance terrorist operations within the country.

Conclusion

South Africa is committed to combating terrorism and has taken proactive measures to counter TF. The country’s primary counter-terrorism legislation, the POCDATARA Act, has been amended to reflect the evolving nature of the terrorist threat. Effective inter-agency information sharing is considered critical to ensure a holistic and accurate TF NRA.

Recommendations

To mitigate the risks identified in this report, stakeholders must work together to:

  • Implement effective risk management systems within banks and financial institutions.
  • Strengthen regulatory oversight of the fintech sector.
  • Improve monitoring mechanisms for non-profit organizations.
  • Enhance inter-agency information sharing and cooperation.
  • Continuously update counter-terrorism legislation to reflect emerging threats.