By Alec Hogg
South Africa has been a member of the Financial Action Task Force (FATF) since 2003. This body which sets global standards to combat money laundering and the financing of terrorism across national borders has been assessing SA’s compliance.
A mutual evaluation was concluded in 2021 and a FATF report published which identified 20 legislative deficiencies. At the FATF’s Plenary this week it will pronounce on SA’s situation, with sanctions including the possibility of grey listing, an event which would significantly increase the financial costs of doing business with the country.
Whatever happens this week, or perhaps in anticipation of a negative ruling, SA’s government has asked the FATF to formally re-assess SA’s compliance at its June 2023 meeting.
National Treasury says considerable work has been done to rectify the country’s shortcomings with specific legislation enacted in 2022 – the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act and the Protection of Constitutional Democracy Against Terrorist and Related Activities Amendment Act. These acts address 15 of the 20 legislative deficiencies identified.
A national strategy on the matter was approved by the Ramaphosa cabinet in November last year, prioritising the building of a financial system that is less vulnerable to abuse and where abuses are effectively prosecuted.
Treasury says the five outstanding deficiencies will be addressed through regulations and practices that do not require legislation. Issues outstanding include:
- Weak implementation of new beneficial ownership legislative requirements for companies, trusts and non-profit organisations.
- Poor anti-money laundering controls in the legal profession, estate agents, crypto and trust service providers.
- The need to increase investigations, prosecutions and asset forfeitures relating to money laundering and terrorism funding.
The 2023 Budget also allocates an additional R265.3 million to the Financial Intelligence Centre over the next three years to implement the recommendations of the State Capture Commission and the FATF.
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