Progress in fight against illicit financial flows

Treasury deputy director-general Ismail Momoniat
Treasury deputy director-general Ismail Momoniat

The regulatory and law-enforcement authorities have made progress in their collaboration in the fight against illicit financial flows, which are estimated to amount to billions of rands annually.

This was the conclusion of a joint meeting by parliament’s finance and trade and industry committees on Wednesday after briefings by the Hawks, the National Prosecuting Authority, Financial Intelligence Centre (FIC), South African Revenue Service (Sars), SA Reserve Bank, National Treasury and the department of trade and industry.

There is an inter-agency working group working on eight cases which each exceed the set minimum financial threshold of R100m.

The total amount involved in the eight cases under investigation by the working group, according to FIC executive manager for analysis Mike Masiapato, is more than R3.9bn, with R2.7bn being related to the transfer of illicit proceeds from the transnational movement of rhino horn and R1.2bn related to the illegal export of funds overseas.

Sars executive Pieter Posthumus said there was an inventory of eight cases involving estimated illicit financial flows in excess of R9bn, which the inter-agency working group was tackling.

It had received 623 suspicious-transaction reports from the FIC over the five years to end-December 2018.

Posthumus said the recently established illicit economy unit was investigating 902 cases, covering industries and sectors such as tobacco, gold, alcohol and fuel, cash and carry, textiles, illicit financial flows and VAT carousel fraud.

The amount involved was R9.8bn. An amount of R1.4bn had been attached under preservation orders.

Finance committee chair Yunus Carrim said the committee was despairing a few years ago, but things were picking up now. “It is encouraging. There seems to be more co-ordination and more verve and drive coming from the FIC,” he said.

Treasury deputy directorgeneral Ismail Momoniat attributed the commitment in dealing with illicit financial flows to the changed political climate.

The change in the leadership of the Hawks and the National Prosecuting Authority also offered hope, the Sars acting commissioner Mark Kingon had brought back the large business centre and established the illicit economy unit, and the FIC and Reserve Bank continued to be stable and operational.

Momoniat said the sharing of information between agencies had also improved.

“We definitely have a much more optimistic feel about what is happening,” he said.

“What we need is a strengthening of the initiatives.

“The commitment is there.”