What is South Africa’s New Financial Crimes Forensic Unit? 

The Financial Intelligence Centre (FIC) – South Africa’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) watchdog – has created a new Forensic Unit to combat financial crimes in the country.  

The unit was officially formed and became operational in April 2023. 

The Forensic Unit will empower the FIC to effectively investigate highly complex instances of financial crime. These cases may include those related to domestic corruption and international money laundering rings and global criminal syndicates operating in South Africa, as well as cases that are still being processed in relation to State Capture.  

According to the FIC’s Executive Manager Christopher Malan, the Forensic Unit will complement the FIC’s existing structures so as to help expedite asset forfeiture and prosecutions.

The addition of specific forensic capacity to the FIC will also help the FIC to build cases and bring them to court more quickly – a process that has historically been extremely long and drawn out due to a lack of this capacity. 

Why has the FIC Created the Forensic Unit? – The Fallout from South Africa’s Greylisting and a Scramble for Compliance 

Although this addition of forensic capacity to the FIC has clear benefits, the Forensic Unit has been created with one express purpose: getting South Africa removed from the FATF’s greylist. 

For years, South Africa's judicial system suffered from a weak AML/CFT regulatory framework and systematic corruption. South Africa’s critical and pervasive legislative shortcomings have for years generated concern from finance and corruption watchdogs, with alarm bells repeatedly being sounded in the last three years. The FATF conducted its two-year Mutual Evaluation Report (MER) on South Africa between 2019 and 2021, which evaluated the capacities of South Africa’s AML/CFT legislative framework. 

The findings of the MER were dire. The FATF’s report found widespread critical deficiencies in South Africa’s AML/CFT legislative framework and in October 2021, South Africa was given one year to correct these deficiencies or the country would face the risk of being placed on the FATF’s greylist – a status that undermines the extent to which companies and other countries can conduct financial transactions to and from South Africa. 

In its one-year grace period, South Africa failed to address the FATF’s concerns. On the 24th of February 2023, South Africa was greylisted by the Financial Action Task Force (FATF) – a decision taken by the watchdog after South Africa failed to demonstrate that it was actively addressing critical issues in its AML/CFT legal framework. To understand more about what exactly being greylisted has meant for South Africa, read our analysis here. 

Since being greylisted, South Africa has made concerted efforts to address the FATF’s concerns. A pertinent recent example of these efforts have been the new Beneficial Ownership laws implemented by the Companies and Intellectual Properties Commission (CIPC), which requires many companies in South Africa to formally register their Beneficial Ownership structures in order to increase transparency in South Africa’s economy. 

In addition to creating the new Forensic Unit, the FIC’s responsibilities have also been given an expanded to include a variety of non-financial industries. Casinos, property practitioners, gaming houses, crypto assets and trusts are now all under the purview of the FIC. 

All of these changes represent efforts by the South African state to mend its broken AML/CFT framework and repair its judicial system in order to get the country removed from the FATF’s greylist and have normal trading operations resume. 

AML, Sanctions Checks and Due Diligence Solutions for South Africa 

Although the fight against financial crime is generally spearheaded by government agencies and regulators, the private sector also has a vital role to play in combating financial crime. Compliance with laws and regulations, coupled with proper risk management and enhanced due diligence procedures, hold the key to an economy in which transactional trust is the norm, not the privileged exception. 

As South Africa’s leading provider of world-class due diligence and remote-onboarding solutions, ThisIsMe is proud to be at the forefront of a trust-based and privacy-compliant digital world. We offer a wide range of FICA-compliant KYC services that encompass politically exposed person checks, account verification services, and company sanction and credit checks. To experience our full suite of due diligence solutions and see how we can help your business meet its AML/CFT regulatory obligations, book a demonstration by contacting our team here.