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Monday, November 28, 2022

FIC recovers more than R5bn in criminal assets

Johannesburg – As the country faces threats of being grey-listed, Finance Minister Enock Godogwana has applauded the Financial Intelligence Centre (FIC), which is understaffed because of resignations, for its major contribution to the fight against financial crime.

Such crimes, which could lead the country into grey-listing, have been identified as major contributors to the deterioration in economic growth. Godogwana’s comment is contained in the FIC 2021/22 Annual Report, which indicated that through the combined efforts of the crime busters, the state had managed to recover more than R5 billion in criminal assets.

This is an increase from R3.3bn recovered in the previous financial year. The report, which was released on September 29, also revealed that the country was facing the problem of human trafficking, wildlife poaching, pyramid schemes, drug trafficking and cybercrime. The minister pointed out that corruption, including financial crime, was a major blight on the country and impedes the sustainability of economic growth that “we need to reach our goal of a better life for all”.

He said the FIC had made its presence felt in combating money laundering and financing of terrorism.

“And I am pleased that during the year under review, the organisation was again exemplary in providing its financial intelligence and other products for use in the fight against financial crime. It also excelled in supervising and enforcing compliance with the FIC Act.”

The FIC report came shortly after the Financial Action Task Force (FATF) had released its Mutual Evaluation Report in which it warned about the possibility of having South Africa grey-listed because of discrepancies in combating financial crime.

South African Reserve Bank (SARB) governor Lesetja Kganyago recently told Parliament that the country needed to up its game in trying to comply with the FATF requirements, which he said would include “law enforcement and prosecutions beyond what we’re doing”.

He told Parliament in August that the SARB had started the process of meeting the FATF’s demands in 2020. Godongwane said the FIC continued to protect the integrity of the country’s financial system from those who were keen to abuse it. He also said the institution assisted in finding ways of complying with the FATF’s demands.

“Many deficiencies were identified, and the FIC continues to assist in co-ordinating the role players in addressing these, under the guidance of the Anti-money Laundering/Counter-Terrorist Financing Interdepartmental Committee that is chaired by the National Treasury,” said Godongwana.

The FIC would collect information about various financial crimes and report them to institutions such as the Asset Forfeiture Unit, Directorate for Priority Crime Investigation, National Prosecuting Authority, South African Revenue Service (SARS), and SARB’s Financial Surveillance Department, which are all members of the Fusion Centre, and the South African Anti-Money Laundering Integrated Task Force (Samlit).

Justice Minister Ronald Lamola unveiled the Fusion Centre two years ago to co-ordinate the fight against corruption, especially those that were related to Covid-19 procurement. There were more than 1 000 inspections conducted for compliance with the country’s financial regulations, and the FIC, Prudential Authority (PA) and Financial Sector Conduct Authority (FSCA) imposed financial penalties of more than R41.6 million for non-compliance.

Out of more than five million regulatory reports, the FIC identified more than half a million suspicious and unusual transactions.

“The banking sector was the largest contributor to regulatory reports, having filed close to four million cash threshold reports and 379 363 suspicious and unusual transaction reports in 2021/22.

“Using the regulatory reports it received from accountable and reporting institutions and other data, the FIC produced 3 114 financial intelligence reports during 2021/22, for use by law enforcement and other competent authorities in their investigations, prosecutions and applications for forfeiture of assets,” the FIC said in a statement.

FIC director advocate Xolisile J Khanyile said from March, the entity, which received a budget of R297.3 million from the National Treasury, lost 22 employees through resignations, which left it with 183 employees, while it required 216 for it to perform smoothly.

“The FIC’s work is of a highly specialised and technical nature, often requiring employees with scarce skills such as forensic accountants, data technologists and other related specialists, qualifications, and expertise.

“Keeping the FIC capacitated with such individuals is a challenge. Increasing the baseline funds received will enable the FIC to offer permanent employment to fixed-term contractors and improve capacity,” said Khanyile.

She said the FIC had achieved its mandate by exchanging information with local and international law enforcement agencies and supervising and enforcing compliance with the Financial Intelligence Centre Act.

“The team achieved and exceeded many of its performance targets while carrying out its mandate to assist in identifying the proceeds of crime, combating money laundering and combating the financing of terrorism and related activities,” said Khanyile.

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