The Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) have jointly assessed the implementation of anti-money laundering and combating the financing of terrorism (AML/CFT) standards in South Africa. Among its major findings were:
- South Africa has made good progress in developing its system for combating money laundering (ML) and the financing of terrorism (FT) since its last FATF mutual evaluation in 2003.
- The money laundering offence is generally in line with the Vienna and Palermo Conventions, although a lack of comprehensive statistics made it difficult to assess effectiveness. Provisions criminalising the financing of terrorism are comprehensive, although they are not yet tested in practice.
- The Financial Intelligence Centre (“the Centre”) is an effective financial intelligence unit.
- The confiscation scheme is comprehensive and utilises effective civil forfeiture measures. Since 2003, South Africa has also adopted mechanisms to freeze terrorist-related assets.
- The FIC Act imposes customer due diligence, record keeping, and suspicious transaction reporting and internal control requirements. It should be noted that, after the FIC Act came into force, South Africa implemented a program to re-identify all existing customers. The issue of beneficial ownership has not yet been addressed, however, and South Africa also needs to adopt measures dealing with politically exposed persons (PEPs) and correspondent banking.
- The FIC Act covers some designated non-financial businesses and professions (DNFBPs); however, South Africa needs to broaden the legislation to cover dealers in precious metals and stones, company service providers, and more broadly cover accountants.
- At the time of the on-site visit, there were not adequate powers to supervise and enforce compliance with AML/CFT provisions; however, amendments to FIC Act have been enacted, and when they enter into force this year they will significantly enhance the compliance regime.
- South African authorities have established effective mechanisms to co-operate on operational matters to combat ML and FT. South Africa can also provide a wide range of mutual legal assistance, including the possibility to extradite its own nationals.