SA has a relatively high volume and intensity of crime and more than half of reported crimes fell into categories that generate proceeds.
This is according to an October 2021 report by the IMF, which warned that the widespread use of cash in the informal economy had placed the country at risk.
Titled Anti-Money Laundering and Combating the Financing of Terrorism, the report reads in part: “The main domestic proceeds generating predicate crimes are tax crimes, corruption and bribery, fraud, then trafficking in illicit drugs and environmental type crimes.
“As a large economy and a regional financial hub for sub-Saharan Africa, SA has a notable exposure to the threat of foreign proceeds of crime generated in the region being laundered in or through the country. SA is exposed to terrorist-financing risks associated with the financing of foreign terrorism, foreign terrorist fightersand potential domestic terrorism.”
It further states that there was “widespread use of cash” in the informal economy, including informal cross-border movement.
“The use of cash is prevalent in SA and it has been assessed as high risk for money laundering and terrorist financing, including cross-border movement. Detecting and recovering cash proceeds of crime remains challenging and efforts to detect and confiscate falsely or undeclared cross-border movement of currency needs substantial improvement.”
According to the report, the country’s law enforcement agencies are consistently understaffed.
“SA has suffered from a sustained period of state capture, which helped to generate substantial corruption proceeds and undermined key agencies with roles to combat such activity. Government initiatives from 2018/2019 were starting to address the situation as of the onset, including by replacing key staff and increasing resources at key law enforcement and judicial agencies.
“A reasonable number of money laundering convictions is being achieved but only partly consistent with SA ’s risk profile. Cases largely concern self-laundering and few cases of third-party ML [money laundering] and foreign predicate offences are prosecuted.
“The proactive identification and investigation of ML networks and professional enablers is not really occurring. Most money laundering convictions relate to fraud cases and there are fewer investigations and successful prosecutions relating to other high-risk crimes. In particular, ML cases relating to state capture have not been sufficiently pursued,” the report found.
It also commended law enforcement on confiscating goods acquired through criminal proceeds, particularly using forfeiture powers that had less success recovering assets from “state capture” and proceeds that have been moved to other countries.
An example of this would be freezing the assets of the Gupta brothers who fled the country to the UAE and are currently in prison awaiting extradition.
Rajesh and Atul Gupta have been in custody in Dubai since July 2022 after an application from South African authorities to have them extradited in connection with the Nulane case.
The state alleges that the Free State department of agriculture appointed and paid Nulane, which is owned by Gupta associate Iqbal Sharma, R24.9m to conduct a feasibility study for the Mohoma Mobung initiative in 2011 under former premier Ace Magashule.
The accused are Peter Thabethe, the former head of the Free State department of rural development; Limakatso Moorosi, the former head of the Free State department of agriculture; Seipati Dhlamini, the former provincial agriculture CFO; Sharma and his brother-in-law Dinesh Patel.
Other accused include Gupta-owned company Islandsite director Ronica Ragavan while Nulane Investments and Islandsite are indicted as entities.
Islandsite and employee Ragavan have submitted that the state has failed to link them to charges of fraud and money laundering.
The case hangs in the balance after the bulk of disputed documentary evidence handed over by the state was ruled inadmissible last week.
nkosin@sowetan.co.za
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