Mutual Evaluation Report - Executive Summary Anti-Money Laundering and Combating the Financing of Terrorism 2009

Background Information 1. This report summarises the anti-money laundering (AML)/combating the financing of terrorism (CFT) measures in place in South Africa as of the time of the on-site visit (4-15 August 2008), and shortly thereafter. The report describes and analyses those measures and provides recommendations on how certain aspects of the system could be strengthened. It also sets out South Africa’s levels of compliance with the Financial Action Task Force (FATF) 40+9 Recommendations (see the attached table on the Ratings of Compliance with the FATF Recommendations). 2. The Republic of South Africa is a developing country located in a region where the economy remains primarily cash-based. It has a first-world banking sector characterised by well established infrastructure and technology, but limited participation (over 60% of the adult population was excluded from any formal financial services in 1994), and a growing demand for financial services. A priority of the Government is to ensure that individuals currently excluded from using formal financial services, particularly potential low-income customers, can access and, on a sustainable basis, use financial services being offered by registered financial services providers and which are appropriate to their needs. 3. Major profit-generating crimes include fraud, theft, corruption, racketeering, precious metals smuggling, abalone poaching, “419” Nigerian-type economic/investment frauds and pyramid schemes, with increasing numbers of sophisticated and large-scale economic crimes and crimes through criminal syndicates. South Africa remains a transport point for drug trafficking. Corruption also presents a problem. However, the South African authorities are committed to pursuing this issue through a range of initiatives such as the introduction of measures to entrench good governance and transparency. Security agencies indicated that the current threat from international and domestic terrorism is low, and will remain to be low for the foreseeable future. Nevertheless, the authorities are vigilant about the concern that South Africa could be used as a transit or hideaway destination for people with terrorist links. 4. The development of AML/CFT systems in South Africa represents work in progress. South Africa has demonstrated a strong commitment to implementing AML/CFT systems which has involved close cooperation and coordination between a variety of government departments and agencies.