Cape Town - As South Africa races to beat the end of October grey listing deadline set by the Financial Action Task Force (FATF), businesses fear that not enough has been done to avoid the likely economic consequences of grey listing and are searching for ways to mitigate repercussions.
When a country is put on the grey list, it means that it is subject to increased monitoring by FATF, the global money-laundering and terrorist financing watchdog, of which South Africa is the only permanent African member.
Master Data Management managing director Gary Allemann said FATF membership helps to streamline the movement of money across borders by guaranteeing that the parties involved in a transaction are above board.
“In South Africa, for example, most of us will be familiar with the Financial Intelligence Centre Act (FICA) – the regulations requiring banks and other parties to confirm an entity’s identification and physical address.”
He said this information is then used to ensure that the person or company is legitimate by comparing to international sanctions lists and to build a risk profile that can flag suspicious transactions, for example, if an amount of money is being moved for a purpose that is not in line with the company’s historical business.
Business Leadership SA (BLSA) chief executive Busisiwe Mavuso said business needs to know whether the work being done by government and agencies such as the NPA, Sars, and Financial Intelligence Centre (FIC) would reduce the chances of being grey listed by FATF.
Mavuso said grey listing had potentially serious implications for the economy, increasing the cost of financial transactions with the rest of the world.
In answer to these fears, BLSA has commissioned research to be shared with the business community on Tuesday October 11. Mavuso said the research would analyse the possible economic consequences of grey listing.
She said: “Those consequences will depend, in large part, on how confident the world is that grey listing is a temporary phenomenon, one that will be ended swiftly, as we move to establish effective institutions that successfully detect and ultimately eliminate money laundering.”
A report by the Global Initiative Against Organised Crime last month said surging rates of murder, extortion and kidnapping pose an “existential” threat to South Africa.
In August, the Cabinet took steps to ensure South Africa was not grey listed by approving important amendment bills aimed at plugging gaps in the country’s anti-money laundering and anti-terrorism funding laws.
The National Treasury said the proposed amendment of the five pieces of legislation, which are administered by different Ministers, sought to satisfy the technical compliance deficiencies related to the 40 FATF recommendations that were identified in the Mutual Evaluation Report of October 2021.
Last week, Parliament began the process of seeking public comment on the Bills.
Mwangi.Githahu@inl.co.za