Combatting Financial Crime

The high crime rate present in South Africa constitutes a serious threat to the society, the people and the economy of this country, consuming approximately 19% of the countries’ GDP. According to the FATF Mutual Evaluation of South Africa 2021 (hereinafter FATF report 2021), more than half of all the reported crimes in South Africa are proceed-generating crimes, violating South African citizens’ lawful rights and livelihoods with the only purpose of obtaining an illicit proceed. The main domestic proceed-generating crimes are tax crimes such as evasion or tax fraud, corruption & bribery across all level of entities and private procurement; fraud schemes such as Ponzi and other investments schemes, or digital banking fraud and cybercrimes involving virtual assets; drug trafficking in which South Africa serves both as market as well as transit point; and environmental crimes such as poaching or illegal mining.

Due to South Africa’s critical role as the financial and economic hub in the southern African region, South Africa is not only exposed to domestic crimes, but also to international criminal networks, being used both as a transit route for illicit goods and even human smuggling, and for the laundering of illicit proceeds through the abuse of South African legal persons and corporations.

In order to effectively and proactively stop and reduce crimes in South Africa, it is essential to prevent criminals from profiting and being rewarded for their illicit activities, or to finance further criminal or even terrorist plans. Therefore, the implementation of effective Anti-Money Laundering and Counter Terrorism Financing measures by all the stakeholders of the economy is KEY to combatting criminal activities in this country. In order to achieve this, every stakeholder in the economy should not only comply with their legal AML/CFT obligations, but also understand their risk exposure and implement mitigating measures that are adequate to the risks, and therefore construct a trustworthy ecosystem in terms of AML/CFT, so every institution can trust other institutions’ controls on the transferred funds and shared business relationships to ensure that they are not connected to criminal activities. When one entity is negligent or fails to comply with its AML/CFT obligations, it is in practice facilitating and motivating the commission of more crimes by exposing a number of entities to illicit money that is laundered, used and enjoyed by criminals.