Although the government says South Africa has made “significant progress” towards addressing the 20 technical deficiencies identified by the Financial Action Task Force (FATF) when it was greylisted in February this year – the regulatory authority notes that there is still much to be done. 

Finance Minister Enoch Godongwana says several government departments and agencies – including the police, the Hawks, the NPA, SIU, SSA, the Reserve Bank, FSCA, and SARS – have been working hard. 

“The FATF noted at its plenary meeting last week that such work is showing positive results, with South Africa having addressed 15 of the 20 technical deficiencies in our legal framework, and making good progress on 17 of the 22 effectiveness action items, including two that are now deemed to be largely addressed,” he said. 

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Significant work to be done

However, the minister tempered this by acknowledging that there is still a “significant amount of work” to be done, particularly with regard to the investigation and prosecution of complex money laundering cases and terror financing, the identification of informal mechanisms for remitting money around the world, and the recovery of the proceeds from crime and corruption.

Yet to be addressed

In a statement towards the end of last month, the FATF said South Africa still needs to:

• Demonstrate a sustained increase in outbound mutual legal assistance requests that help facilitate money laundering/terrorist financing investigations and confiscations of different types of assets in line with its risk profile;
• Improve risk-based supervision of organisations such as casinos; dealers in previous metals and precious stones; lawyers, notaries, other independent legal professionals and accountants; and trust and company service providers;
• Demonstrate that all anti-money laundering and counter-terrorism finance supervisors apply effective, proportionate, and effective sanctions for non-compliance;
• Ensure that competent authorities have timely access to accurate and up-to-date beneficial ownership information on legal persons and arrangements;
• Apply sanctions for breaches of violation by legal persons to beneficial ownership obligations;
• Demonstrate a sustained increase in law enforcement agencies’ requests for financial intelligence from the Financial Intelligence Centre for its money laundering/terrorist financing investigations;
• Demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering, and the full range of terrorist financing activities
• Enhance the identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes;
• Update its terrorist financing risk assessment to inform the implementation of a comprehensive national counter financing of terrorism strategy; and
• Ensure the effective implementation of targeted financial sanctions and demonstrating an effective mechanism to identify individuals and entities that meet the criteria for domestic designation.

Government expects to address all the deficiencies identified by FATF by early 2025. Godongwana says steps are in place to make better and more targeted use of the Criminal Assets Recovery Account to address crime. DM