SA’s greylisting by the Financial Action Task Force (FATF) in February 2023 certainly had negative consequences for the country’s reputation, investor confidence and the cost of doing business, but at the end of the day it has been a good thing for the improvement of our legislative, supervisory and prosecutorial regimes.
The National Treasury says it remains confident SA will be removed from the greylist by October, having already met all but two of the 22 action requirements imposed by FATF. The intergovernmental organisation, which sets international standards for global compliance with anti-money-laundering and antiterrorist financing rules, says the two outstanding items have been partly addressed.
The shock of greylisting galvanised government into action. Multi-agency task teams were set up to address the FATF’s findings, a plan of action was drawn up, laws were amended, supervision tightened and greater focus given to the prosecution of cases involving money-laundering and terrorism financing.
The FATF imposed the greylisting after finding SA’s legislative and supervisory regime not only wanting in a number of respects, but also that its implementation and effectiveness were poor. The body called for stricter supervision of designated nonfinancial businesses and professions such as lawyers, estate agents, trusts and dealers in precious metals, and recommended sanctions for noncompliance.
The Financial Intelligence Centre (FIC) has been vigorous in enforcing compliance and the range of accountable institutions that have to report to it for suspicious transactions, among other things, has been broadened.
The country’s beneficial ownership legislative and supervisory regime did not exist and so it was not possible to identify the ultimate owners of assets. That was addressed through the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, with new obligations imposed on companies and trusts to report beneficial ownership information to the Companies and Intellectual Property Commission.
The flow of intelligence from the FIC to the SA Police Service needed to be strengthened and the capacity of the National Prosecuting Authority (NPA) and SAPS needed to be enhanced, the FATF said.
And most difficult of all, it said SA should demonstrate a sustained increase in investigations and prosecutions of serious and complex money-laundering and terrorism financing cases. The emphasis is on “sustained” — one or two cases would not suffice.
That has been a consistent stumbling block, given the NPA’s difficulty in successfully prosecuting high-profile cases, and was once again the reason the FATF could not agree to lift the greylisting at its February plenary meeting.
But Ismail Momoniat, the leader of SA’s delegation to the organisation, has said these items were always going to be the most difficult as they represented the end point of the action plan.
Encouragingly, Treasury said in a statement last week that SA’s investigation and prosecution agencies were working closely on a prosecution-guided investigation strategy to ensure SA could demonstrate sustained progress. As it pointed out, this is not only critical to get off the greylist but also to strengthen the fight against crime and corruption.
Business has partnered with government in the fight against crime and has partnered with the Hawks to set up a specialised forensics laboratory to speed up prosecutions of 20 priority crimes involving money-laundering.
All of this is good and government should be congratulated on its responsiveness.
Though the greylisting damaged SA’s reputation, it has been of a short-term nature. Without the actions demanded by the FATF the country could have become a global haven for money-launderers and financiers of terrorism with even worse consequences.
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