Only by prioritising a concerted crackdown that brings all stakeholders together can the country arrest the spread of financial criminality.
South Africa is grappling with a “perfect storm” for rampant financial crimes like money laundering and fraud that are going widely under-reported and under-prosecuted, said Chad Thomas, CEO of IRS Forensic Investigations, at the 2024 Fighting Financial Crime Conference hosted by DocFox in June.
“South Africa has exceptionally low conviction rates for even the most heinous violent crimes like rape and murder,” Thomas said. “As a result, criminals rightly feel there will be little to no consequences for financial crimes either. This emboldens them, contributing to the escalating kidnapping rates in South Africa. Organised syndicates have commanded ransoms reaching into the tens of millions of rands.”
The cost of financial crime is staggering, with estimates that money laundered globally each year amounts to 2-5% of world GDP—$800 billion to $2 trillion. Yet in South Africa, much white-collar crime goes undetected or unaddressed because of limited resources for investigation and enforcement.
“We know people lost their life savings or were driven to suicide by fraud, but many cases simply go unreported out of embarrassment,” Thomas said. “Other countries increasingly treat financial crime as the national security threat it is, but South Africa hasn’t prioritised it adequately amid the burden of violent crime.”
He highlighted key agencies like the Hawks are operating at half their required capacity, with financial crime case backlogs stretching over five years due to budget and staffing constraints. Greater political will and collaboration across public and private sectors are needed to finally get ahead of these crimes.
Alarming statistics like these underscore the urgency for organisations and individuals, such as the Financial Intelligence Centre (FIC) and other industry leaders, to implement robust processes and procedures to combat financial crimes. A multi-stakeholder approach is crucial for success in this fight. Accountable Institutions are at the forefront, and by adhering to regulations like the FIC Act, they can play a pivotal role.
The Role of Technology in the Fight Against Financial Crime
Adhering to FICA compliance obligations remains an enormous hurdle across many industries. Non-financial businesses such as legal firms and Property Practitioners are two sectors repeatedly cited as non-compliant. Statistics from the FIC are staggering: around 80% of law practices fail to properly implement FICA’s mandated controls.
As highlighted during the conference, FICA compliance is no longer just about collecting an ID and proof of address; it involves multiple intricate steps and processes that, when executed properly, can be time-consuming but are indispensable. This is where software and digital solutions comes into play, it can simplify processes for Accountable Institutions to eliminate discontinuation or failure in processes, enhance customer experience, and ensure rigorous FICA compliance.
Developed in adherence to South Africa’s FICA regulations, DocFox equips Accountable Institutions with an end-to-end solution to meet their “Know Your Customer” due diligence requirements. Our software simplifies and accelerates document submission while validating identities, assessing high-risk factors, and maintaining detailed audit trails – all to ensure FICA compliance.
DocFox’s watchlist service provides ongoing, reliable, and efficient screening against a range of international sanction lists, Domestic Political Persons exposure, Prominent Influential Persons and additional warnings that could indicate potential higher risk, arming companies with a new streamlined and comprehensive approach to detecting risk and combating financial crime.
When it comes to combating financial crime, all South Africans have a role to play. Through increased awareness, prioritisation, and enforcement from public-private partnerships, the nation can still turn the tide.
Watch the video below for highlights from our Fighting Financial Crime Conference.
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