Another blow to SA’s fiscal image, but it’s not surprising

It is worrying – but not surprising – that South Africa might be put on an international watch list because of its ineffectiveness at combating money laundering and the financing of terrorism.

This country has been identified as one of the “soft” places where international criminal gangs can “wash” their dirty cash and where terrorists can move money about to fund global atrocities.

Although the “grey” rating of South Africa by the global Financial Action Task Force (FATF) is regarded as only “moderate”, it nevertheless places our country in some unwholesome company when it comes to international financial dealings.

This, in turn, could possibly jeopardise future investment in South Africa or see existing investors pull out, National Treasury tax and financial sector head Ismail Momoniat warned Parliament yesterday.

We’ve been given eight months to get our house in order and there is a laundry list of aspects of our financial procedures which need to be improved.

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According to Momoniat, “South Africa has not positively demonstrated that confiscation of falsely declared cross-border movement of currency is being addressed” and the global body ruled that “South Africa has failed to demonstrate that they are effectively identifying the specific roles played by terrorist financiers”.

Our lax legislative system, coupled with the inability – either deliberate or through incompetence – of some of our justice systems to track and apprehend transgressors, were probably one of the reasons the Guptas found this country to be ripe for the plucking.

Yet, more worrying, it is not only the state which is responsible for this deterioration of our international image of fiscal propriety, it is also some of our professional financial advisor firms and financial institutions who are to blame.

A thorough house cleaning is needed.