South Africa’s understanding of trade-based financial crime limited says FATF

South Africa has been given 18 months by the Financial Action Task Force (FATF) to improve its capacity to track and prosecute money laundering and terrorist financing or face being including on the so-called FATF grey-list.

The Mutual Evaluation Report of South Africa published this month by FATF identified significant weaknesses in sections of the country’s anti-money laundering, counter financing of terrorism and counter financing of proliferation systems, including a lack of capacity to effectively combat and prosecute trade-based financial crime.

Limited understanding

The South African authorities only have a limited understanding of more sophisticated money laundering typologies, including trade-based schemes such as mis-invoicing according to the report.

It says the authorities also did not show an in-depth understanding of the specific vulnerabilities or channels exploited, such as types of corporate structures most misused or vulnerable, the role of enablers, the geographic regions or corridors most exposed to cash smuggling.

The report also found a lack of understanding of the foreign jurisdictions where the most proceeds ended up, although Dubai and China have been mentioned in a few recent cases.

Vulnerabilities and channels exploited

The report concludes that the authorities well recognise the need for an improved understanding of the vulnerabilities and channels exploited.

But the relative low number of cases for significant or sophisticated money laundering or main proceeds generating predicate offenses such as corruption hampers efforts to better understand those vulnerabilities and channels.

The FATF’s Mutual Evaluation Report of South Africa can be found here.


Categories: Trade Based Financial crimes News

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