Sars makes last-ditch bid to force Sasfin to pay up in R5bn illicit outflows case

The South African Revenue Service (Sars) has doubled down on its view that banks cannot evade accountability for facilitating the unlawful expatriation of funds as it makes a last-ditch attempt to force Sasfin to pay about R5bn to the fiscus over money laundered through its facilities.

The tax agency is seeking leave to appeal a November high court ruling that found imposing a duty on banks to protect Sars against losses arising from assisting taxpayers to unlawfully move money offshore would have a “chilling effect” on the banking sector.

Judge Etienne Labuschagne held that Sars’ approach would create a risk of liability where none currently exists, upholding several of Sasfin’s exceptions to the agency’s particulars of claim.

On a holistic reading, the court concluded it would be unreasonable to impose the pleaded common-law duty on an authorised dealer bank to protect Sars from loss arising from the tax affairs of the bank’s customers.

Read: Sars vs Sasfin: R5.3bn tax claim heads to trial

The tax agency has taken umbrage at the court’s position, believing a different court will come to a different finding.

Sars in its court papers, seen by Business Day, said that Sasfin, as an authorised dealer, intentionally facilitated the unlawful expatriation of funds by approving transactions which it knew, or must have known, “were supported by fraudulent or nonexistent documentation”.

It said the lender also failed to comply with the mandatory requirements of the country’s exchange control regulations and the authorised dealer manual, and that the high court failed to recognise the impact of this failure.

“The court ignored the fact that, as a matter of law and regulatory design, a customer cannot unlawfully export funds through the South African banking system except with the participation and approval of an authorised dealer,” the papers read.

“The court ignored that no funds could leave South Africa except through an authorised dealer, making Sasfin the final and decisive gatekeeper whose intentional noncompliance directly enabled the unlawful outflows of funds. Therefore, Sasfin, not its customers, enabled and facilitated the unlawful export of the funds.

Read: TIISETSO MOTSOENENG: Sars v Sasfin pits fiscal recovery against systemic risk

“Sasfin, as a bank which has been appointed as an authorised dealer, exercises complete operational control over the purchase of foreign currency and the export of funds and bears the legal obligation to ensure compliance with the exchange control regulations and the administrative provisions in the authorised dealer manual.”

Sars’ main accusation is that Sasfin enabled illicit financial flows through its systems, mainly by controversial tobacco producer Gold Leaf, which owns brands such as RG cigarettes.

The accountability challenge by Sars comes as the agency opens a formal channel with one of its largest corporate taxpayers — part of a group that paid R600bn in 2024/25 — as it seeks to rebuild credibility and stabilise the second-largest source of state revenue with more predictable, sector-by-sector collections.

Sars’ new large business forum comes as the tax collection agency continues rebuilding after the state capture years almost killed the goose that laid the golden egg.

The Edward Kieswetter-led agency has not been shy to take on the illicit economy as it tries to claw back R800bn in uncollected taxes from individuals and companies.

Business Day in March reported that Sars took an unprecedented step as it pursued funds of alleged “gold mafioso” Andries Greyvensteyn’s assets in the United Arab Emirates (UAE) and US, seeking to recoup about R3bn it says is due to the fiscus.

Greyvensteyn’s movements out of the country have been severely restricted, with his Gold Kid outfit, now under a curator’s management, having been found by the tax agency to be fraudulent.

The curator is authorised to dispose of the assets through auctions or out-of-hand sales and to pay the proceeds of the sales to Sars in reduction of any tax liability of Greyvensteyn and Gold Kid.

Gold Kid’s activities became public via a investigation by Al Jazeera’s investigative unit, which showed how multiple gangs smuggle gold from Zimbabwe and use it to launder vast amounts of money.

Staff at South African bank Sasfin were implicated in colluding with the money-launderers. The tax agency last year served Sasfin with a civil summons for R4.87bn plus interest and costs, which the bank is opposing.