Government’s plan to avoid grey-listing

Finance minister Enoch Godongwana said the government is doing everything necessary to prevent grey-listing by the Financial Action Task Force (FATF).

The FATF’s assessment of South Africa found that the country has poor legal, regulatory, and operational measures for combating money laundering and terrorist financing.

These findings have placed South Africa at risk of being grey-listed by the FATF, which will negatively affect the country’s economy.

Many business and economic leaders, including Reserve Bank governor Lesetja Kganyago, urged authorities to take urgent action to prevent being grey-listed.

“The negative economic consequences of the increased scrutiny grey-listing would bring will be massive,” Kganyago said.

During his medium-term budget policy statement (MTBPS) speech, Godongwana said they are working hard to avoid grey-listing.

“We have tabled two bills in Parliament aimed at addressing weaknesses in our legislative framework,” he said.

The bills are expected to be enacted by the end of this year and will be a significant step towards meeting the 40 recommendations made by the FATF.

“We are also required to implement laws on anti-money laundering and corruption more effectively,” he added.

“Investing in building the capacity of our regulatory and enforcement institutions is already bearing positive results.”

Godongwana provided a few examples, including:

• The Investigating Directorate of the National Prosecuting Authority has enrolled 26 cases, declared 89 investigations, and 165 accused persons have appeared in court for alleged state capture-related offences.

• The Asset Forfeiture Unit has frozen or granted preservation orders to the value of R12.9 billion and returned a total of R2.9 billion to affected entities.

• The SIU has instituted four High Court cases in relation to contracts worth R62.1 billion.

• SARS investigations arising from the Commission’s findings and evidence have resulted in collections of R4.8 billion in unpaid taxes.

He said SARS is currently engaged in 18 projects involving 222 cases. Eleven of those cases are recommendations explicitly for SARS to execute and eight have been finalised, and the others are under investigation.

This 2022 MTBPS proposes additional resources to the budgets of the National Prosecuting Authority, the Special Investigating Unit, the Financial Intelligence Centre and the South African Revenue Service.

These resources, he said, will further improve the capability of the state to investigate and prosecute sophisticated financial crimes.

“Government will also publish a revised national risk assessment strategy on anti-money laundering and terror financing,” Godongwana said.