US steps in to help SA halt greylisting threat

US Treasury Secretary Janet Yellen committed on Wednesday to combat money laundering and boost terror financing controls in South Africa, which currently faces greylisting by global financial watchdogs. A task force will prioritise the sharing of “financial red flags and indicators” related to the illegal wildlife trade and those overlapping with investigations into high-level corruption, drug trafficking and transnational criminal organisations. The trade in perlemoen, rhino horns, pangolins and elephant ivory will hopefully be curtailed as a result. Finally, some good news for poor, beleaguered South Africa. – Sandra Laurence

US, South Africa team up to combat illegal wildlife trade

US and South African authorities will share financial intelligence to combat wildlife trafficking, a move aimed at helping Africa’s most industrialised economy address shortcomings in tackling illicit flows flagged by a global financial watchdog.

A soon-to-be formed task force will prioritise the sharing of “financial red flags and indicators” related to the illegal wildlife trade and those overlapping with investigations into high-level corruption, drug trafficking and transnational criminal organisations, US Treasury Secretary Janet Yellen said on Wednesday.

“Wildlife traffickers, corrupt officials, and other criminals rely on many of the same vulnerabilities in anti-money laundering regulatory regimes, so our efforts to combat wildlife trafficking reinforce our efforts to fight corruption, and vice versa,” she said in a speech at a game reserve north of South Africa’s capital, Pretoria. The task force’s creation will also bolster the efforts of law-enforcement agencies to pursue and recover the illicit proceeds of wildlife trade, including abalone, rhino horns, pangolins and elephant ivory, she said.

The agreement comes as the southern African nation seeks to avoid being placed on the Financial Action Task Force’s so-called grey list that identifies nations with shortcomings in tackling illicit financial flows. South African authorities will make a final case against being classified by the Paris-based watchdog as a jurisdiction that should be subjected to increased monitoring at a meeting scheduled for February 23-25. 

South Africa was found wanting in all 11 of the FATF’s effectiveness measures to combat money laundering and the financing of terrorism. The evaluation was carried out in 2019 after an era of endemic graft during former President Jacob Zuma’s nine-year rule. Zuma, who quit in 2018 under pressure from the ruling party, has denied wrongdoing.

Greylisting will cause reputational damage for South Africa, lead to capital and currency outflows, and increase transactional, administrative and funding costs for banks, according to the country’s central bank.

South African President Cyril Ramaphosa late last month signed into law two key pieces of legislation that were seen as important in addressing the deficiencies flagged by the watchdog. Officials at the US Treasury and South Africa’s National Treasury will also work with law-enforcement agencies and the private sector to strengthen controls to combat money laundering and terrorist financing, Yellen said. 

During her three-day visit to South Africa, Yellen will meet Ramaphosa and Finance Minister Enoch Godongwana.

© 2023 Bloomberg L.P.

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