Financial Forensic Analysis Centre

Publication Date: 10/11/2023

To bolster South Africa’s capacity to investigate and prosecute financial crime, the Banking Association South Africa (BASA) and the South Africa Banking Risk Information Centre (SABRIC) are partnering with the Directorate for Priority Crime Investigation (Hawks), to make a cutting edge digital and financial Forensic Analysis Centre available to the directorate. The centre will provide the Hawks with:

  • Advanced training for 40 senior investigators in essential financial forensic analysis skills, to allow them to more efficiently retrieve and analyse digital data.
  • State-of-the-art software and hardware – along with the necessary technical support – for use in the investigation of money laundering and terrorism funding, among other financial crimes; and
  • Promote ongoing collaboration, high ethical and professional standards and innovation among those working for – and with – the centre.

The fully-staffed centre opened on 02 November 2023 and the training of the 40 investigators – who have signed a pledge to act ethically and work with integrity – has already begun. It is an indication of what can be done through effective partnerships that the Hawks, BASA and SABRIC were able to conceptualise, build and procure the necessary skills and equipment for the forensics centre, in under six months. SABRIC, a public benefit organisation with a 20-year history as a strategic partner to banks and the South African Police Service (SAPS), will host and oversee this transformative project.
The Hawks have diligently upheld their independence and autonomy through legal safeguards, ethical standards, transparency, and active engagement. They unequivocally remain in full control of their forensic investigations. BASA and SABRIC will have no influence whatsoever over the use of these tools in the investigation of cases.
This project represents a significant stride in ongoing business partnerships with government, aimed at addressing the three primary challenges that hinder economic recovery: unstable power supply, logistical bottlenecks, and pervasive crime and corruption. As emphasised by the Minister of Finance, Enoch Godongwana, in the Medium Term Budget Policy Statement, the battle against crime is a critical driver of economic growth.
South Africa’s greylisting by the Financial Action Task Force (FATF), attributed to deficiencies in anti- financial crime capacity, underscores the imperative for banks to partner with regulators and law enforcement to mitigate risk of the financial system being abused to commit crime.
In his statement, the minister was optimistic regarding the progress made to remove South Africa from the FATF grey list, anticipating that all deficiencies will be effectively addressed by early 2025.
However, he warned that there is a significant amount of work that must still be done regarding the investigation and prosecution of complex money laundering cases and terror financing. While South Africa has made notable progress in fulfilling the technical and legal remedial actions required by FATF, much of what needs to be fixed lies with the criminal justice system, which has not yet succeeded in showing a sustained increase in the investigation and prosecution of financial crimes. This may well hinder South Africa’s removal from the grey list by early 2025.
Besides contributing to fulfilling the immediate remedial requirements of the FATF, the resourcing and training component of this project will – over the longer term – strengthen the capacity of South Africa to demonstrate its ability to successfully investigate and prosecute financial crimes. SABRIC will continue to work to improve communication, processes and liaison between banks and law enforcement.
In the year to March 2023, banks reported over 420 000 suspicious transactions to the Financial Intelligence Centre (FIC) and 3,6 million transactions that breached cash deposit thresholds. While these transactions must be reported, they are not necessarily a breach of law.
Banks are also part of the South African Anti-Money Laundering Integrated Task Force (SAMLIT), where the FIC and law enforcement agencies come together on a case-by-case basis to speedily share information in support of criminal investigations and applications for the seizure and forfeiture of assets. This information assists in attaining warrants and affidavits in support of criminal investigations and applications for the forfeiture of assets.
FATF found that, in general, banks in South Africa complied with international regulations and best practice and the task force did not require any remedial measures from the banking industry. However, banks are taking proactive steps to better understand the threats they face from money laundering activity in South Africa.
Currently, there are no indications that significant numbers of international financial institutions are exiting their business with South African companies or individuals. This could change quickly if a lack of confidence takes hold about South Africa’s ability to implement the remedial actions FATF requires for it to exit the grey list in a timely manner. Already, the European Commission has added South Africa to its own list of high-risk countries, which by regulation, requires its financial institutions to employ enhanced due diligence measures in business relationships and transactions with South Africa. It is likely that the United Kingdom will follow suit and include South Africa on its list of high-risk countries.
The application of enhanced due diligence requirements by other jurisdictions is unlikely to affect the ability of South African banks to provide financial services to companies and individuals, domestically. But South African banks rely on global financial institutions to provide cross border and international banking services. Financial services provided to South African based companies and individuals by overseas banks – like offshore accounts for individuals based in South Africa – are likely to come under increased scrutiny. Over the medium to long-term, while it is impossible to quantify, there will be an opportunity cost as investors, who may have considered South Africa, move to destinations perceived to be less onerous and more compliant with international regulation.
However, if South African companies run their businesses in a manner that complies with national and international regulations, then the risk of doing business with them will be more acceptable to domestic and international banks. Anti-financial crime legislation aims to prevent money laundering and illicit financial transactions and should not cause concern for legitimate businesses. – Ends

Kunene is the Managing Director of BASA and the Chair of SABRIC. Mewalall is the Chief Executive Officer of SABRIC.