South Africa gets new financial crime-fighting unit

[Nat Quinn]

South Africa’s Financial Intelligence Centre established a forensic unit to help the government fight corruption and prosecute complex financial crimes, part of an effort to have the nation removed from a global watchdog’s dirty-money watchlist.

The unit, which opens on Saturday, will complement the FIC’s existing structures, the center’s Executive Manager Christopher Malan said Friday in an interview. It’s expected to help expedite asset forfeiture and prosecutions, he said.

The FIC is mandated to assist in identifying the proceeds of crime, and combating money laundering, the financing of terrorism and the proliferation of weapons of mass destruction.

Having forensic capacity will help ensure that matters can be taken to court quicker, especially when it comes to dealing with major corruption and state capture-related crimes, he said.

The Financial Action Task Force, a Paris-based agency, placed South Africa on its so-called gray list in February because of the state’s shortcomings in tackling illicit financial flows and the financing of terrorism.

The decision followed an era of endemic government corruption — referred to locally as state capture — under former President Jacob Zuma that his successor Cyril Ramaphosa estimates cost the economy at least R500 billion.

An extended stay on the list may damage investor sentiment toward South Africa, leading to capital and currency outflows.

Some of the issues the nation needs to address in order to be removed include:

• A sustained increase in investigations and prosecutions of serious and complex money-laundering cases.

• Ensuring the authorities have timely access to accurate and up-to-date beneficial ownership information.

• Improving risk-based supervision of designated non-financial businesses and professions, which the FIC oversees.

The National Treasury has allocated R265.3 million to the FIC, which the agency will use to hire staff for the forensic unit and its expanded supervisory role, Malan said.

“The lion’s share of the funding is going to go to increasing the supervision capacity,” he said.

In December, the FIC’s purview was increased to include designated non-financial businesses and professions, such as property practitioners, casinos, gaming houses, trusts and crypto assets.

“We are looking at close to 60,000 entities we would have to bring into the net,” a 10-fold increase, and the aim is to have them all registered by December, Malan said. “The FATF needs us to account for this early next year.”

To provide better data on the ownership structures of companies and trusts, the FIC’s corporate registry — the Companies and Intellectual Property Commission, which administers about 2.1 million active entities — will initiate the compilation of a beneficial ownership registry next week, subject to regulations being passed, Malan said.

“The regulations are in the final stage of drafting,” he said. “We are hopeful they will be considered on Monday and, with that, the CIPC will have the legal mandate to receive beneficial ownership information from companies.”

 

source:South Africa gets new financial crime-fighting unit – Daily Investor

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