Despite all the effort that the National Treasury and other government agencies have put into getting SA removed from the Financial Action Task Force (FATF) greylist, the Treasury itself admits that there is a real risk that SA will not qualify for removal by June next year, the earliest hoped-for date.
The next possible date will be October, meaning the dark cloud hanging over SA’s international reputation will persist for longer. This has implications for cross-border and correspondent banking transactions, which come under greater scrutiny and at greater cost.
Progress has been made in meeting some of the standards laid down by the Paris-based body that stipulates the requirements that countries must comply with to effectively address money-laundering and the financing of terrorism.
Of the 22 action plans that SA was required to undertake to improve its regime, 16 have been accomplished since it was greylisted in February 2023. This is a laudable testament to the hard work invested in the task. The Treasury has played a critical role in overseeing the implementation of the action plans.
Among the achievements has been getting legislation on to the statute books that specifically addressed FATF requirements. The omnibus General Laws (Anti-Money-Laundering and Combating Terrorism Financing) Amendment Act amended several laws so that the registration of beneficial ownership was tightened.
The range of accountable institutions required to report to the Financial Intelligence Centre (FIC) was expanded to include co-operative banks, credit providers, crypto asset service providers, high-value goods dealers, trust and company service providers, payment clearing operators and others.
The major hurdle remaining is SA being able to show that there has been a sustained increase in the number of investigations and prosecutions of money-laundering and financing of terrorism cases
The supervisory capacity of the Financial Sector Conduct Authority and the FIC has been strengthened and there has been an increase in the seizure of the proceeds of crime.
These however are the low-hanging fruit. The major hurdle remaining is SA being able to show that there has been a sustained increase in the number of investigations and prosecutions of money-laundering and financing of terrorism cases. It is a tough ask. The emphasis is on sustained, so a few successes here and there will not suffice.
Of the six remaining action plans, three relate to this requirement. Achieving it lies solely in the hands of the National Prosecuting Authority (NPA), SAPS and the Hawks, which have been slow off the mark ever since SA’s greylisting in February 2023 and have been criticised for failing to bring high-profile corruption cases to court. There is little the Treasury and other government agencies can do to expedite their work.
It has taken the NPA a long time to recover from its hollowing out during the state capture years. It and other law enforcement agencies were at their weakest when SA was evaluated for FATF purposes. The establishment of the Investigating Directorate Against Corruption as an independent entity will hopefully result in more money-laundering and financing of terrorism cases being taken to court.
The Fusion Centre located in the FIC and consisting of a range of law enforcement and other agencies has also been central to the government’s efforts to address money-laundering and terrorist financing.
Another FATF requirement that SA will have to comply with is to get its beneficial ownership information up to date — difficult to achieve when companies and trusts have been tardy in complying.
With the Christmas break slowdown looming, the chances are slim that SA will satisfy FATF at its plenary meeting in February.
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