Real progress is being made to avoid greylisting, says Momoniat

Treasury acting director-general Ismail Momoniat says SA has made “significant and real progress” in meeting the requirements laid down by the Financial Action Task Force (FATF) to avoid greylisting.

Though an Intellidex report for Business Leadership SA said there was an 85% probability that SA would be greylisted, Momoniat continued to maintain that there was a chance of it being avoided.

“I certainly have not given up and will fight to the fullest extent to prevent it. We are making significant and real progress,” he said in an interview after attending an FATF plenary session in Paris last week. He acknowledged, however, that avoiding the greylist would be “tough”.

Greylisting by the FATF would have severe consequences for SA because it would enhance the perceived risk of doing business and raise the cost of doing so.

It would, in particular, damage the correspondent relationships that SA banks have with their counterparts overseas.

The FATF is an international body that sets standards to be adopted for the combating of money laundering and terrorism financing.

Momoniat led a high-powered SA delegation from various government agencies to an FATF plenary meeting last week and used the occasion to interact and learn from other countries on what they are doing to meet FATF standards.

The plenary and working group meetings took place at the FATF headquarters in Paris from October 18 to 21 and were attended by delegates from 200 jurisdictions.

The SA delegation included representatives from the Reserve Bank, Treasury, Financial Intelligence Centre, National Prosecuting Authority, State Security Agency and Financial Sector Conduct Authority.

The meeting did not deal with the follow-up mutual evaluation report on SA and whether the country had done enough to avoid a greylisting.

This decision will be made by the FATF plenary in February on the basis of an assessment of the secretariat and the regional FATF joint group.

While SA was not the focus of the meeting, Momoniat said the representatives of the government agencies were able to learn from their counterparts in other countries on the measures they had adopted to meet FATF standards. There was no indication yet of how the FATF would decide on greylisting SA, Momoniat said, but the government and its agencies were doing everything possible to avoid it.

SA has already submitted a preliminary report on the two bills that are being processed in parliament that aim to strengthen the regime for combating money laundering and terrorism financing. Momoniat was confident these bills would be adopted by parliament by the end of the year, “which will be a big step forward as we will be seen to technically comply”.

Terrorism

The FATF identified weaknesses in the legislative framework as well as the effectiveness of law enforcement.

The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill aims to strengthen the requirements for the disclosure and tracking of beneficial ownership so the ultimate owners of assets can be identified and to prevent criminal activity being hidden behind opaque corporate structures.

Amendments to the Financial Intelligence Centre Act will expand the list of accountable institutions that have to report to the Financial Intelligence Centre. In addition, the Protection of Constitutional Democracy Against Terrorist and Related Activities Amendment Act deals specifically with the crime of terrorism.

Momoniat noted that progress had been made in the criminal prosecution of those involved in state capture and other financial crimes and the seizure of assets suspected to be the proceeds of criminal activities.

Last week’s attachment by the Reserve Bank of former Steinhoff CEO Markus Jooste’s assets worth an estimated R1.4bn could be seen as another indication of the effectiveness of law enforcement. President Cyril Ramaphosa’s action plan to implement the recommendations of the Zondo commission will also be a milestone.

A comprehensive report on what SA has done or is doing to comply with all the recommendations made in an October 2021 report by the FATF will be submitted by SA in late November.

ensorl@businesslive.co.za