Treasury deputy director-general Ismail Momoniat. Picture: MARTIN RHODES
Treasury deputy director-general Ismail Momoniat. Picture: MARTIN RHODES

The regulatory and law enforcement authorities have made progress in their collaboration in the fight against illicit financial flows which are estimated to amount to billions of rand annually.

This was the conclusion of a joint meeting by parliament’s finance and trade and industry committees on Wednesday after briefings by the Hawks, the National Prosecuting Authority (NPA), Financial Intelligence Centre (FIC), SA Revenue Service (Sars),  the Reserve Bank, the Treasury and the department of trade & industry.

There is an inter-agency working group on illicit financial flows consisting of the agencies which is working on eight cases which each exceed the set minimum financial threshold of R100m. The total amount involved in the eight cases under investigation by the working group, according to FIC executive manager for analysis Mike Masiapato, is well over R3.9bn, with R2.7bn related to the transfer of illicit proceeds from the transnational movement of rhino horn and R1.2bn related to the illegal export of funds overseas.

Sars executive Pieter Posthumus added that there was an inventory of eight cases involving estimated illicit financial flows in excess of R9bn which the inter-agency working group was tackling. It had received 623 suspicious transaction reports from the FIC over the nearly five years to end-December 2018.

Posthumus said the recently established illicit economy unit was investigating 902 cases covering industries and sectors such as tobacco, gold, alcohol and fuel,  cash and carry, textiles, illicit financial flows and VAT carousel fraud. The amount involved was R9.8bn. An amount of R1.4bn had been attached under preservation orders.

Greater coordination

Finance committee chair Yunus Carrim said committee was despairing a few years ago but things were picking up. “It is encouraging. There seems to be more coordination and more verve and drive coming from the FIC,” he said.

Treasury deputy director-general Ismail Momoniat attributed the commitment in dealing with illicit financial flows to the changed political climate. The change in the leadership of the Hawks and the  NPA also offered hope; the Sars acting commissioner Mark Kingon had brought back the large business centre and established the illicit economy unit, and the FIC and Reserve Bank continued to be stable and operational.

Momoniat also remarked that the sharing of information between agencies had improved.

“We definitely have a much more optimistic feel about what is happening. What we need is a strengthening of the initiatives underway. The commitment is there,” he said.

Reserve Bank head of financial surveillance Elijah Mazibuko noted that between April 1 2015 and February 28 2019, R2.45bn in funds involved in illicit foreign currency transactions had been blocked and 941 accounts blocked while R628.6m had been forfeited.

The NPA and the Hawks briefed MPs on the cases they were dealing with, most of which related to the illegal export of funds, often in the form of cash uncovered at ports of entry. Head of the Hawks, Lieutenant General Godfrey Lebeya, said about R137.5m had been forfeited to the state over a period of about five years. Also pending were foreign exchange control regulation cases amounting to about R5bn.