Johannesburg - The Financial Action Task Force, an international organisation established to combat money laundering, has placed South Africa on its greylist, which the Public Servants Association has noticed with great concern.
Although the decision was expected, South Africa’s greylisting was not an overnight decision, as it was alerted to deficiencies well in advance.
Potential risks were not addressed swiftly, making this warning shot even more urgent to avoid further economic disaster. The unfortunate yet expected decision by the FATF to greylist the country necessitates urgency and commitment towards rebuilding institutions that were weakened by massive corruption during the state capture period.
PSA said it was a distressing reality that South Africa is part of a group of 23 countries in the world with inefficient systems to combat money laundering and terrorism financing.
The organisation’s spokesperson, Ruben Maleka, said: "The country cannot afford to be labelled as dangerous to trade owing to its failure to live up to global standards to combat money laundering, terrorism financing and proliferation financing."
He believes that increasing the cost of doing business in South Africa will make it even more difficult for small businesses to survive and that job creation will suffer, which will be bad for the country.
"Despite the fact that the country has at least two major legislative systems in place to combat money laundering, namely the Prevention of Organised Crime Act of 1998 (POCA) and the Financial Intelligence Centre Act of 2001 (FICA), corruption and organised crime continue to thrive, as evidenced by the state capture inquiry," he said.
Maleka said the FATF identified eight strategic deficiencies that South Africa must address to ensure removal from the greylist.
He believes the Minister of Finance's statement that the country will work quickly and effectively to address all of these deficiencies is insufficient.
"The greylisting is set to deter investors, of which the country is in dire need, to resuscitate the dwindling economy and related high unemployment. The PSA urges the Minister of Finance to put all measures and action in place to ensure that the situation is short-lived and that South Africa is removed from the damning list soonest."
"The country cannot strengthen critical institutions without employing highly skilled and competent individuals to counteract criminality in state institutions in all its forms. Investment in information and communication technology infrastructure is further critical to enable linkage and integration of the systems to ensure timeous identification of anomalies," said Maleka.
The Democratic Alliance reacted to SA’s greylisting problem by saying that FATF’s recent greylisting of South Africa is a damning indictment of our criminal justice system and the government’s inability to combat financial crimes such as money laundering and terrorism financing.
DA spokesperson for finance, Dion George, said it had escalated South Africa’s problems and weakened the country.
"The greylisting has placed our nation at significant risk, as the rest of the world now views South African companies and individuals as high-risk counter-parties in global transactions."
"This development is completely unacceptable, and our government must act immediately to correct this untenable situation. We must restore trust in our financial system and show the international community that South Africa is a responsible and trustworthy trading partner," said George.
South Africa’s National Treasury on Friday said that it expected increased monitoring by the FATF to have a limited impact on financial stability and the costs of doing business with South Africa.
The Treasury further said that the costs of increased monitoring would be lower than the long-term costs of allowing the economy to be contaminated by the proceeds of crime and corruption.
The Star