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Picture: 123RF/ETIAMOS
Picture: 123RF/ETIAMOS

It’s not every day that the National Treasury warns SA that the country faces “dire consequences” unless it “performs a few miracles”, puts that in capital letters, and presents it as a slide to a pack of news-hungry journalists.

But that is exactly what acting Treasury director-general Ismail Momoniat did last week on the issue of SA’s “almost certain” greylisting by the Financial Action Task Force (FATF), an international watchdog on money laundering and terrorism financing.

It’s clearly a cry for help. And if it isn’t, it should be, for the stakes could hardly be higher. Being greylisted would be comparable to a ratings downgrade in that it would raise the cost of transacting with SA. This would severely harm its economic competitiveness and international reputation.

Until recently, the Treasury has been plodding along behind the scenes, leading the interdepartmental committee that the cabinet established in December 2018 to co-ordinate all the legal and policy changes required to bring SA’s inadequate anti-money-laundering and anti-terrorism-financing system up to the FATF’s high standards.

But with just three months to go before the FATF concludes its year-long observation on whether SA has done enough to improve its “very poor” initial score, the Treasury has finally gone on the offensive.

First, it plans to table an omnibus bill to push all the required legislative changes through parliament. At a minimum, SA needs to improve its rating to “largely compliant” on all six big technical issues identified by the FATF. But with parliament headed into recess until August, it’ll be a scramble to get it to pass the legislative amendments before year-end.

The bigger problem is to show tangible progress in remedying SA’s “critically weak” performance on all 11 of the FATF’s effectiveness measures. These are designed to show how capable a country’s criminal justice system is of convicting people for money laundering and terrorism financing.

A central area of weakness is the lack of transparency in SA over beneficial ownership. It means the private sector and authorities battle to detect the involvement of criminal enterprises using companies and trusts as fronts to channel their proceeds through local financial institutions.

The Treasury admits that limited progress has been made in addressing many of the effectiveness measures. It wants “a co-ordinated and concerted effort” to improve the criminal justice system’s ability to tackle these financial crimes.

Among other things, it needs to beef up its forensic capabilities, and all the agencies involved need to be able to share confidential, critical information much more effectively.

Despite his warning that SA will be greylisted unless it performs a few miracles, Momoniat remains confident that the country can avoid a greylisting, as it has a credible path to demonstrate both its commitment and progress to the FATF. “It will be tough but achievable,” he says, “and the political will is there.”

His assurances are hardly compelling, however. Pushed on why so little headway has been made over five years he says, diplomatically: “We all could have moved faster.”

At least this is honest, but that will be cold comfort for SA’s banks and businesses when the country is greylisted.

“We all could have moved faster” is becoming a fitting epitaph for a country that never moves until it is pushed; a country that is in slow decline.


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