A possible greylisting of financial institutions in South Africa would again be an own target for South Africa after the civil unrest in July last year and a subsequent rating downgrade, says FNB CEO Jacques Celliers.
In a recent interview with the Sunday TimesCelliers said that if the international watchdog, the Financial Action Task Force (FATF), could extend its TNZT, it could help South Africa dodge the list.
The FATF recognized flaws in the country’s financial system that allowed money laundering, terrorist financing and other financial crimes to take place. It then gave South Africa until October to prove it has a credible plan to address the shortcomings.
If not provided, the country could be graylisted in February next year, making it even more difficult to do business.
In terms of a possible extension, the FATF said the deliberations of the plenary and the body’s decision-making body were confidential and the results would not be announced until October.
“Maybe we’ll be lucky and get a little grace to close some of the gaps identified by the researchers,” Celliers said.
“There is an expectation that we will be recognized for the hard work the country has done – not just the banks, all sectors, the regulators and law enforcement. We hope those will go a long way to prove we can extend an extension.” before making their final decision.
The CEO said if the country didn’t get the extension, the focus of government and big business would shift to how quickly the country could reverse it. Other countries around the world have quickly bounced back from a gray list, he added.
Other banking figureheads such as: captaincy have agreed to the possible greylisting with the chief information officer. Wim de Bruyn, Chief Information Officer of Capitec, said the bank is actively working with the South African Reserve Bank (SARB) to avoid the greylisting.
De Bruyn told BusinessTech that the banking industry as a whole is committed to and aware of the new adjustments, improvements and additional requirements being introduced to reduce financial crime in the country.
“If it did happen, we plan what impact it could have,” he said. However, Capitec, as a primary retail bank, will see less of an impact than banks that engage in many cross-border transactions.
The group’s director for the retail banking division, Graham Lee, said the potential greylisting also falls on the government’s shoulders and what it plans to do as some of the FATF’s recommendations relate to the criminal justice system and assets. to detect and prosecute unsavory financial activities.
Other views in the local banking sector differ. Nedbank CEO Mike Brown suggested that the possible greylisting wouldn’t be as bad as a credit downgrade and, while not ideal, the country would be able to weather the storm.
Sim Tshabalala, CEO of Standard Bank, meanwhile, said the greylisting would be much worse than a cut and would have a major impact on the country.
The Ministry of Justice and Constitutional Development recently said a gray list would have serious consequences for the country’s economy, reducing investor confidence and negatively impacting financial well-being.
The department has so far among other actionscreated the Anti-Money Laundering (AML) Desk within the National Prosecuting Authority (NPA) to investigate and prosecute financial crimes, improved processes within the NPA’s International Cooperation Unit and increased staff capacity at headquarters.
The establishment of the Anti-Money Laundering (AML) Counter within the National Public Prosecution Service (NPA). The counter has drawn up a Strategy against Money Laundering, which includes the investigation and prosecution of money laundering and terrorist financing.
The processes of the NPA’s International Cooperation Unit have been improved with regard to referrals related to foreign predicate offenses.
The government has also taken legislative action, with the cabinet pushing through new bills in a flurry to try to meet FATF TNZT requirements.
One of the most influential new bills is the Anti-Money Laundering and Combating Terrorism Financing Amendment Bill, which, once enacted, will bring the country in line with some of the FATF’s recommendations, the National Treasury said.
The bill makes changes to four key financial acts, changing wording and responsibilities to better protect South Africa’s financial systems from money laundering and terrorist financing:
- Trust Property Control Act;
- Nonprofit Organizations Act;
- Financial Intelligence Center Act;
- Companies Act, and;
- Financial Sector Regulation Act.
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