Despite some progress in addressing its compliance with the global anti-money laundering watchdog, South Africa has come up short in the investigation and prosecution of money laundering and terror financing cases – meaning the country will be on the watchdog’s grey list until at least 2025.
This is according to Finance Minister Enoch Godongwana, who provided an update on the government’s progress in fighting crime and corruption in South Africa during his presentation of the Medium-Term Budget Policy Statement (MTBPS) on 1 November.
Fighting crime is a crucial ingredient in enhancing economic growth, and the government is working hard to address deficiencies in our fight against organised crimes and illegal financial flows, said Godongwana.
In February, South Africa was greylisted by the Financial Action Task Force (FATF) for shortcomings in tackling illicit financial flows, which put pressure on the government’s foreign-funding costs and trade flows.
The watchdog found that South Africa fell short in meeting all 11 of the FATF’s effectiveness measures to combat money laundering and the financing of terrorism – especially following an era of endemic graft during former President Jacob Zuma’s nine-year rule.
“Since February, many government departments and agencies – including the police, the Hawks, NPA, SIU, SSA, the Reserve Bank, FSCA, and SARS – have been working hard to address these deficiencies,” said Godongwana.
He added 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 effective action items, including two that are now deemed to be largely addressed.
However, Godongwana highlighted that there is still a significant amount of work that must 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.
“The government, therefore, expects to address all the deficiencies identified by FATF by early 2025,” he said.
Godongwana also said the government is devising ways to make better and more targeted use of the Criminal Asset Recovery Account (CARA) to address crime.
“The South African Police Service, The Defense Force, the Financial Intelligence Centre, the Department of Home Affairs and the Border Management Authority have all received allocations from this fund”.
Other reforms included in Godongwana’s address are improving the legislative environment in areas such as financial management and financial governance.
“These reforms will respond to the recommendations of the Zondo Commission, the Mpati Commission, and the Nugent Commission,” he said.
“I will shortly table an Omnibus Bill for public consultation, which will include key amendments to various pieces of legislation, including the Public Finance Management Act of 1999 (PFMA), Municipal Finance Management Act of 2003 (MFMA) and South African Revenue Service Act (SARS Act),” he added.