Vincent Gaudel, Financial Compliance Crime Specialist at LexisNexis Risk Solutions.
Just over a year after South Africa was graylisted by the global financial crime watchdog Financial Action Task Force (FATF), the country has made significant changes to its anti-money laundering and countering the financing of terrorism (AML/CFT) framework. Improved. However, much remains to be done before the country is removed from the gray list.
Initially accused of not fully complying with international standards on the prevention of money laundering, terrorist financing and proliferation financing, FATF reviewers recently found that SA Most of the compliance deficiencies have been addressed.”
According to Vincent Gaudel, a financial crime and compliance expert at LexisNexis Risk Solutions, SA's ratings have been upgraded on 17 recommendations, and now 34 of FATF's 40 recommendations are in 'compliance' or 'nearly compliance'. ''
“It is clear that technological progress is undeniable and this has been recognized by the FATF. For South Africa to be removed from the gray list, this positive trend must continue and lead to tangible results. “There is,” he says.
“The 2022 amendments to the Financial Intelligence Center Act (FICA) will significantly improve financial oversight and compliance by responsible institutions. It will level the playing field with respect to compliance expectations and address the technical challenges raised by the FATF report. This gap should be filled and appropriate powers and responsibilities should be given to the Center.
These amendments are far-reaching and aim to directly address some of the weaknesses highlighted in the FATF assessment, he noted. One of the key areas of change is improved sectoral coverage, expanding the range of professions covered by the FIC.
“Additionally, amendments have been made to the definitions of key terms such as ‘beneficiary,’ ‘prominent influential person,’ and ‘politically influential person,’ to improve risk management, compliance programs, and due diligence. Expectations for measures are also clarified: they will be applied by responsible authorities.
“Another important aspect of the 2022 amendments to FICA is the addition of powers and responsibilities for the Center. It will have improved access to information held by other state agencies and responsible agencies, and will be able to give instructions not to proceed with transactions. Through new capabilities, the Center will be able to better monitor and disrupt illicit financial flows. These new powers are closely linked to its revised functions and objectives. , now tasked with providing forensic information.”
Godel points to a recent IMF study that found the economic impact of being on the FATF gray list could lead to a 7.6% reduction in annual GDP in capital inflows. Although it is probably too early to quantify the impact in South Africa's case, the clear conclusion remains that it is safer not to remain on the gray list for long.
“In the long term, being removed from the FATF gray list and continuing to improve national measures against money laundering and terrorist financing will have significant benefits. A strong financial system forms the backbone of a strong economy,” he said.
“Finally, ensuring that competent authorities have the resources, powers and skills to effectively investigate, prosecute and confiscate the proceeds and instruments of all underlying criminal activity, including corruption, will benefit the public service and, by extension, wider South African society.” We can expect it to have a positive impact.”
He also suggested that it is essential that responsible institutions remain critical gatekeepers to the health of the financial system and the broader economy, and that such companies must use cutting-edge AML to fulfill that role. /CFT and sanctions controls need to be implemented, it added.
“As a company, AML/CFT is not just about complying with FICA and other applicable regulations, but also about effectively understanding your company’s exposure to money laundering and terrorist financing risks. , which aims to help you detect and manage those risks.
“Finally, financial crime compliance technology is essential today to combine effective and efficient controls and deliver a robust risk-based approach. SA’s AML/CFT framework is rapidly building and Oversight of the sector will only become more stringent, so it is important for companies to be proactive in building their internal compliance programs and be prepared to demonstrate flawless AML/CFT management.” Gaudel concludes.
