Mark Kingon. Picture: BLOOMBERG
Mark Kingon. Picture: BLOOMBERG

The law governing customs and excise matters is to be amended to allow the SA Revenue Service (Sars) to work more closely with banks in a bid to stamp out illicit financial flows.

Illicit financial flows represent a huge loss to the fiscus estimated at billions of rands.

The proposed amendment to the Customs and Excise Act was signalled in the budget review tabled in Parliament on Wednesday and mentioned by Sars acting commissioner Mark Kingon in reply to questions by MPs on Thursday.

Kingon accompanied finance minister Tito Mboweni and Treasury officials in a briefing to members of four parliamentary committees on the budget.

The budget review said that “the government will consider amendments enabling the confidential disclosure of names and associated reference numbers of customs clients as well as other information necessary to verify legitimate financial flows”.

“The proposed amendment will align the Customs and Excise Act with the similar approach adopted in the Tax Administration Act.”

Kingon explained that the Tax Administration Act allowed Sars to provide, for example, tax reference numbers to employers. The proposed amendment to the Customs and Excise Act would allow Sars to provide customs numbers to banks, enabling them to validate some of the information they receive in order to make advance payments for goods ordered from overseas.

This would enable Sars and the banks to verify that the trade is legitimate and help prevent advance payments being made when no goods are received. It is in this manner that funds flow illicitly overseas.

“We do believe from the information that we have received from the banks that this is one of the areas being utilised for illicit financial flows,” Kingon told MPs.

“People place an order and the goods never arrive. If we can reconcile that we do believe that we can address that.”

He added in an interview that “the banks engaged with us extensively and showed us that there is a tremendous gap between the advance payments they make and the reconciliation of this with the goods actually coming in. This will help close this gap. It won’t be perfect it, but it will help,” Kingon said.

ensorl@businesslive.co.za