South African banks at high risk for money laundering and terrorist financing

Bruce Whitfield interviews Fundi Tshazibana, Deputy Governor of the South African Reserve Bank.

South African banks have moved into the high risk category for money laundering, terrorist financing and proliferation financing.

The discovery is contained in a report by the Prudential Authority (PA) of the South African Reserve Bank (Sarb).

It indicates that the five major banks in the country are the most at risk.

The Palestinian Authority’s report follows an initial report by the Financial Action Task Force (FATF), the global watchdog for money laundering and terrorist financing.

South Africa has until October to provide a plan to address the shortcomings identified by the intergovernmental body.

Bruce Whitfield interviews Fundi Tshazibana, Deputy Governor of the South African Reserve Bank and member of the Monetary Policy Committee (MPC).

Tshazibana points out that the AP report does not say that our banks are doing things wrong, but identifies the risks as they exist.

In our world of finance, we speak of inherent risk, that is to say the risks as they are, then we also speak of residual risks, that is to say once the banks have put in place the law, what remains.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

This FATF report set out to point out that South Africa is high risk simply because of its nature as an emerging country and the type of transactions, so what we have done as a prudential authority is to put in place **our** perspective that identifies what these risks are so that banks are aware of them and can actively engage with them.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

She notes that financial crimes are increasingly prevalent and therefore the FATF conducts periodic reviews in all countries.

What puts banks at high risk is contactless banking…There are things like identity theft…There are also transactions that are done through other commercial vehicles such as trusts… and cash transactions that make it very difficult to identify customers.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

Tshazibana says there is cause for concern because “if we don’t take the actions they have identified as shortcomings, there is a very high risk that we will be placed (on the gray list)”.

However, she reassures:

The AP is working at breakneck speed to make sure we comply when they approach us in October to see how we are doing in terms of enhanced surveillance.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

The Prudential Authority has also published a separate report for the life insurance sector.

For more details, listen to Tshazibana’s interview below:

This article first appeared on CapeTalk: South African banks at high risk of money laundering and terrorist financing – regulator

About Mitchel McMillan

Check Also

Parliamentary committees finalize two bills to prevent greylisting

The government is racing against time to avoid punishment by the global watchdog, the Financial …