Cracking down on money laundering leads to the confiscation of the proceeds of crime.
The annual report of the Financial Intelligence Centre (FIC) provides a valuable update on the efforts of financial authorities and businesses to strengthen oversight of financial transactions and eventually remove South Africa from the Financial Action Task Force (FATF) grey list.
Being on the list indicates that SA’s regulatory structures are not strong enough to prevent money laundering or the financing of terrorist groups.
Finance Minister Enoch Godongwana notes in the annual report that when the FATF placed SA on the grey list in February 2023, it posed questions about the ability of government, civil society, and the private sector to safeguard the economy against exploitation by criminal elements.
“During the last financial year, pivotal milestones were attained to help bring the grey-listing chapter to conclusion,” he says.
“In June 2025, the FATF announced SA had substantially completed all 22 action plan items which had been adopted when it was grey-listed in 2023.
“The FATF will verify that the actions mentioned have indeed been taken, and once verified, exiting the grey list becomes a real possibility,” says Godongwana in the report.
The FIC reports that its actions assisted in recovering R144 million in the proceeds of criminal activity and blocked another R158 million as suspected proceeds of crime.
This seems low, especially when one reads headlines that Tembisa Hospital alone was looted to the tune of R2 billion.
The health minister publicly said that the culprits are driving a Lamborghini Urus.
With a 650-horsepower engine and a top speed of 305km per hour, this is a Lamborghini that will put you back close to R7 million.
The Asset Forfeiture Unit of the Special Investigating Unit (SIU) attached the car last week, as well as properties and more luxury cars, including a R4 million Bentley.
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Successes
The FIC reports some successes in its annual report. Acting director Pieter Smit says the organisation has been successful in identifying the proceeds of crime and combatting money laundering.
The FIC notes that property transactions are often used to launder money. In one case, regulatory reports from an estate agent regarding the purchase of a R4.6 million property looked odd when the buyer made payments from five separate entities.
The paperwork also contained inconsistencies, and it came to light that the buyer had bought the expensive property without even viewing it.
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Foreigners using SA
Other regulatory reports filed by estate agents put the spotlight on an alleged online scammer. The reports cited big property purchases by a Nigerian national.
“Explanations on sources of the funds were deemed to be suspicious and included crypto trading, car sales, and other sources,” it says.
“According to records and regulatory reports provided by the banks, the subject was based in Polokwane on a study visa.
“The FIC determined that the subject had a personal and business bank account belonging to a company that was registered under his name, reflecting large amounts of incoming and outgoing funds, which were inconsistent with his claimed status as a student visa holder.
“The case was referred to the police, Sars [South African Revenue Service] and the financial intelligence unit in Nigeria for further analysis.”
In another case, a media story alerted the FIC to a suspicious tender involving billions in Zimbabwe and the subsequent movement of money into SA.
The company involved and a Zimbabwean citizen acting as its agent in that country were being investigated by Zimbabwe’s anti-corruption authority for alleged price gouging on election-related material and equipment.
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Sars and government entities
Sars asked the FIC to investigate the flow of funds after it paid a fraudulent value-added tax (Vat) refund of nearly R3.4 million. The money then moved through bank accounts that had little other activity.
The FIC reported that the money was blocked and eventually seized, recovering the full amount.
A blatantly corrupt businessman was also caught by following the money. He was appointed and paid by a municipality, but provided no services. He also dealt with other municipalities.
Then there was the employee of a state-owned enterprise (SOE) who was investigated after allegations that he had influence over the procurement process. It was found that a lot of money was paid into the spouse’s bank account and quickly moved to the employee’s account. A look at the companies doing business with the SOE showed that they also paid school fees for the employee’s children.
Yet another investigation found that a supplier to a government department paid R3 million into an account possibly linked to a government employee who was involved in awarding the contract.
The FIC’s analysis found a high number of transfers, including R1.8 million to one entity and 244 card purchases totalling R1.8 million. There were also nine electronic banking payments totalling R179 310 and two interbank transfers amounting to R900 000.
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PPE fraud
The FIC also helped with the well-known case of government employees and connected persons who were allegedly involved in a fraudulent contract to supply personal protection equipment (PPE) during the Covid-19 pandemic.
“The FIC searched its regulatory and statutory databases and requested information from accountable institutions on the subjects and related entities,” according to the FIC report.
“It was found that suspicious and unusual transaction reports, as well as cash threshold reports submitted to the FIC by accountable institutions regarding the subjects and related entities were valued at more than R30.5 million.
“Analysis indicated that amounts of R1.4 million and R80 million were transferred from the government department to accounts of the related entities,” it says.
“Bank statements revealed that some funds were transferred from entities’ accounts into the subjects’ accounts and between the subjects.”
There were many other enforcement actions.
In total, the FIC received more than 16 million regulatory and cash threshold reports from reporting institutions, of which 570 000 looked suspicious. Yes, criminal charges are coming.
This article was republished from Moneyweb. Read the original here.
