SA banks at high risk of money laundering, terrorist financing – regulator

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SA banks at high risk of money laundering, terrorist financing – regulator

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

@ daniilantiq/123rf.com
  • The Money Show
  • Bruce Whitfield
  • Money laundering
  • Banks
  • Financial Action Task Force
  • Fundi Tshazibana
  • Prudential Authority
  • Financing terrorism
  • FATF

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

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

It says the country’s five large banks are most at risk.

@ daniilantiq/123rf.com

The PA report is in response to an initial report by the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.

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

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

Tshazibana emphasizes that the PA report is not saying that our banks are doing things wrong, but identifying the risks as they exist.

In our world of finance we talk about inherent risk which is risks as they are and then we talk also about residual risks, which is once the banks have implemented the law, what is left.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

This report FATF has undertaken flags that South Africa has got high risk just by its nature as an emerging market country, and the type of transactions, so what we’ve done as the Prudential Authority is to put together **our **perspective that identifies what those risks are so that the banks are aware of them and can actively engage on that.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

She notes that financial crimes are increasingly widespread and that is why FATF does periodic reviews across countries.

Things that place banks at high risk are contactless banking… There are things such as identity fraud… There are transactions also that are done through other commercial vehicles such as trusts… and cash transactions that make it very difficult to identify clients.

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

Tshazibana says there is a need to be concerned because “if we do not undertake the actions that they’ve identified as gaps, there is a very high risk that we be placed (on the grey list)”.

However, she does add some reassurance:

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

Fundi Tshazibana, Deputy Governor – South African Reserve Bank

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

For more detail, listen to the interview with Tshazibana below:

This article first appeared on CapeTalk : SA banks at high risk of money laundering, terrorist financing – regulator

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