South Africa Country Financial Crime Dashboard 2023 by FCN

Today Financial Crime News is publishing a Financial Crime Country Dashboard for South Africa. This December 2023 Dashboard includes, for example approx 150 data points which have been collected and are represented over 2 pages. It informs as to the nature of the financial crime threats, the main vulnerabilities, how resilient South Africa is to these threats and its overall level of response, with important KRI and KPI data, all from publicly available sources albeit assessed and analysed for accuracy and relevance by FCN.  

FCN Country Risk Scores & Ratings: South Africa is rated 61/100 and having a Moderate to High Threat level, with a “Low – Moderate” Response at 66/100, resulting in an overall Risk of Moderate – High at 63/100, using the FCN Methodology. Whilst there is significant room for improvement the rating is better for example than that for FATF Members, Turkey (80), Russia (78) & China (77), but equal with African Peer Kenya (63) and ahead of Nigeria (69), but behind those leading in Africa, namely Mauritius (26), followed by the Seychelles (33).

Financial Crime Threats: The Highest rated threats are from: fraud, drug trafficking, corruption & bribery, tax crimes, modern slavery & human trafficking, environmental crimes, smuggling illicit goods, money laundering, terror financing, cybercrime, illicit mining and smuggling of precious metals and stones. South Africa has a relatively high volume and intensity of crime, with more than half of reported crimes falling into categories that generate proceeds. The sigificant use of cash is also considered as a higher risk factor. Corruption and bribery is seen as a major threat due to the high volumes of proceeds generated, as well as the high prevalence which fuels the “enablement” of other predicate offences and ML. South Africa has suffered from a sustained period of “State capture”, which helped to generate substantial corruption proceeds and undermined key agencies with roles to combat such activity. South Africa’s mid-year Numbeo crime index score is 75.5 and only lower than Venezuela, Papua New Guinea, Afghanistan and Haiti.

Organised Crime: According to the Organised Crime Index, republished in 2023, South Africa is ranked 7th highest  globally (out of 193 Countries) for criminality in the Index, behind only Myanmar, Colombia, Mexico, Paraguay, & DRC and Nigeria with Kenya in 16th place. See OCI 2023 

Sector Vulnerabilities: High” risk sectors were identified as Large Banks & Foreign Banks, Authorised Dealers in Foreign Exchange (ADLAs) including MSBs, the Gambling sector, the Real Estate sector, Legal Practitioners. “Medium” risk sectors include Medium & Small Banks, Trust & Company Service Providers. Additional focus areas include corporations & trusts, cryptocurrency & virtual assets service providers. – According to the NRA 2022, “Insufficient corporate ownership transparency also represents an acute vulnerability in South Africa. Companies and trusts are misused often for ML or to carry out predicate crimes and there is no comprehensive framework for accessing accurate and up-to-date Beneficial Ownership (BO) information. Insufficient BO transparency is an acute vulnerability as companies and trusts are often misused for ML or to carry out predicate crimes. Various DNFBPs, particularly attorneys and TCSPs are inherently vulnerable to misuse” – SA NRA AML/CTF 2022

Responses: South Africa’s 4th Round MER 2021 showed a sharp decline in technical ratings and South Africa was placed on the FATF grey list 2021. In a relatively short space of time South Africa’s latest “Follow Up Report” (FUR) published in November 2023, is encouraging showing improvements to 18 ratings. Still, there is a long road ahead for South Africa to demonstrate it’s ability to respond to threats and determine whether the threats and vulnerabilities identified are receiving the appropriate level of funding, support and attention from the appropriate institutions and in particular from government sectors. South Africa (after the recent 2023 evaluation) is Compliant in just 5/40 Recommendations, Largely Compliant in 29/40 Recommendations, Partially Compliant in 5/40 Recommendations, (R2: National Co operation & Co ordination, R6 Targeted Terrorism/TF Financial Sanctions, R7: Targeted PF Financial Sanctions, R15: New Technologies, & R32: Cash Couriers), 0/40 Non-Compliant and 1/40 N/A (Reliance on Third Parties) Recommendations. On Effectiveness, South Africa (in 2021) received 0/11 Highly Effective Ratings, 2/11 Substantially Effective Ratings, 6/11 Moderately Effective Ratings & 3/11 Low Effective Ratings.  The Low ratings were for IO5 (Transparency and Beneficial Ownership), IO9 (TF Investigations & Prosecutions), and IO10 (Prevention of Terrorism & Terrorism Finance.

The FATF reported in October 2023 that, “South Africa has taken steps towards improving its AML/CFT regime including by addressing technical deficiencies in its targeted financial sanction regime related to proliferation financing. South Africa should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating a sustained increase in outbound MLA requests that help facilitate ML/TF investigations and confiscations of different types of assets in line with its risk profile; (2) improving risk-based supervision of DNFBPs and demonstrating that all AML/CFT supervisors apply effective, proportionate, and effective sanctions for noncompliance; (3) ensuring that competent authorities have timely access to accurate and up-to-date BO information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to BO obligations; (4) demonstrating a sustained increase in law enforcement agencies’ requests for financial intelligence from the FIC for its ML/TF investigations; (5) demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile; (6) enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes, in line with its risk profile; (7) updating its TF Risk Assessment to inform the implementation of a comprehensive national counter financing of terrorism strategy; and (8) ensuring the effective implementation of targeted financial sanctions and demonstrating an effective mechanism to identify individuals and entities that meet the criteria for domestic designation”. 

According to the FATF. grey listing will continue until at least October 2024 where South Africa is expected to report back to the FATF on progress.

Key Outcomes Performance Data for South Africa:

FIU Staffing: 378 year

SARs Reported: 558,348 in 2022/3

SAR Conversion Rate: 3,369 FIU reports disseminated / Rate 2,384 – 1

PPP: SAMLIT since 2019

NRA: Yes latest ML/TF/PF 2022

ML Convictions: 85 in 2022/3

Human Trafficking Convictions: 11 in 2021

Foreign Bribery Convictions: None (2018-2021)

Assets Seized: US$46 Million (0.3% of estimated financial crime proceeds @ 3.6% of GDP) 2022/3

Assets Confiscated: US$26 Million (0.2% of estimated financial crime proceeds @ 3.6% of GDP) 2022/3.

For the South Africa Financial Crime Dashboard see below and HERE: FCN South Africa DEC PBLD

For a copy of the 2021 Dashboard for South Africa see HERE and for the 2020 Threat Assessment see HERE

These materials are owned and copyrighted by Metriqa Ltd/Financial Crime News 2023.

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