Convicted money launderers and terrorist-financing perpetrators will face dire consequences ranging from hefty fines to lengthy imprisonment. This is according to Dr Damian Viviers, a director in the commercial practice group at Phatshoane Henney Attorneys, basing this on the provision of the amendment act now in force after most of remaining provisions became effective on 1 April.
Viviers stressed that the new anti-money laundering amendment legislation affects individuals, companies and trusts alike.
Stringent measures are now in place in the wake of the Financial Action Task Force (FATF) placing South Africa and Nigeria on the global financial watchdog’s so-called “grey list”, denoting the nations with shortcomings in their tackling of illicit financial flows. The FATF grey listed the two countries on 24 February.
This decision impacts the two countries’ international reputation and further raises operating costs for banks and asset managers in the respective countries.
As such, new types of anti-money laundering amendment legislation have been drafted, compelling all trustees and companies to comply. Especially given the dire consequences following non-compliance.
“These amendments affect various areas of our law and introduce numerous new compliance requirements for companies, trusts, non-profits as well as existing accountable institutions, as defined by the Financial Intelligence Center Act (Fica).
“They also introduce substantial sanctions in the form of fines and jail time for certain entities. This, as government seeks to wield a big stick to bring entities in line with the new regulatory requirements – ‘comply or suffer the consequences’, as it were,” Viviers explained.
The FATF periodically assesses nations and the effectiveness of their financial intelligence regulatory frameworks and controls to prevent money laundering, the illicit flow of money and financing of terrorism.
When serious deficiencies in a country’s framework are identified, the FATF may consider placing that country on what is termed their “grey list”.
South Africa was grey listed following a joint assessment by the International Monetary Fund (IMF), the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), and the FATF – with adverse findings of weaknesses and shortcomings being identified.
The assessment report was released in October last year, with November set as the deadline for South Africa to implement remedial financial actions to avoid being grey listed in February 2023.
“Given that South Africa failed to remedy these in time, the FATF proceeded to officially place the country on its grey list, with all the consequences that follow such grey listing.
“A key criticism levelled against South Africa by the FATF was its poor track record in identifying, investigating and convicting money laundering and terrorist-financing crimes.
“The FATF also noted the increasing levels of financial crime, with specific mention also of increasing levels of corruption and state capture within government institutions,” said Viviers.
