What financial regulator is doing to get SA off greylist

SA’s financial conduct regulator is taking on more staff and investigations as part of a crackdown on money laundering and terrorism financing after criticism by an international watchdog, its commissioner says.

The Financial Sector Conduct Authority (FSCA), which is funded through industry levies, had also tripled its budget for the 2023/24 fiscal year from 2022/23 to finance the expansion, Unathi Kamlana said in an interview.

The drive aimed to fix shortcomings identified by the international Financial Action Task Force (FATF) in 2023 when it placed SA on its greylist of countries under special scrutiny over implementing standards to prevent money laundering and terrorism financing. SA is working to exit the greylist in 2025.

In its past two financial years, the FSCA had more than doubled its supervisory capacity and “expects another doubling for the next financial year”, Kamlana said. “We were at seven and will probably end up with about 36 personnel by 2025.”

The authority had seen a 300% jump in supervisory activities this financial year and aimed to impose bigger fines for breaches of money laundering and terrorist financing rules, Kamlana said.

“We’ve received quite good co-operation from financial institutions,” he said. “I think the financial sector quite appreciates the need for us to address the issues around greylisting and we hope that we will make further progress this year in addition to the progress that we’ve already made.”

The FSCA was also working to regulate crypto currencies after they were brought within its remit in 2022. Kamlana said the authority had received about 340 applications for crypto currency licences across different types of business models, including exchanges, and was assessing them.

“We expect that some time in March we should be able to license maybe 60 or so of those and then proceed with others,” he said.

On Thursday, the National Treasury said the FATF had confirmed that five of the 22 actions it had identified had been addressed or largely addressed. “While SA is on track to address all the outstanding action items, it remains a tough challenge to address all 17 of the remaining action items by February 2025,” the Treasury said.

Reuters