Money laundering involves disguising proceeds from criminal activities as legitimate earnings. It presents significant risks to both the national and global economies. The geographical positioning of the Republic of South Africa makes it a crucial hub for illicit undertakings, including money laundering, drug trafficking, human trafficking, and diamond trade.

South Africa’s efforts to combat money laundering are primarily built upon two key legislative measures: the Financial Intelligence Centre Act (FICA) and the Prevention of Organized Crime Act (POCA). FICA became operational in 2001, followed by the implementation of POCA in 1998. As part of these initiatives, the establishment of the Financial Intelligence Center (FIC) took place in 2001. The FIC undertakes audits and implements control measures aimed at preventing money laundering within South Africa. Its primary responsibility lies in upholding the integrity of the country’s financial system. To achieve this, the FIC ensures that financial institutions comply with prescribed procedures through regular assessments of their reports and records.

South Africa is a member of the Financial Action Task Force (FATF). In May 2017, South Africa achieved compliance with FATF’s global standards by introducing amendments to its anti-money laundering (AML) laws. These legislative changes have significantly altered the AML requirements imposed on financial institutions. The revised Financial Intelligence Centre Act (FICA) now establishes Customer Due Diligence (CDD) obligations for financial institutions, which include the following mandatory transactions:

• Identification and verification of clients.
• Assessment of customer risk levels.
• Maintenance of up-to-date customer information.
• Recording of customer information.

Financial institutions that fail to meet these CDD requirements cannot attain AML compliance and may face administrative penalties.

Money laundering is considered a serious offense in South Africa, and the government is committed to enhancing anti-money laundering measures. To achieve this, South Africa enforces AML regulations that financial institutions must adhere to. These institutions implement controls in accordance with the regulations to ensure AML compliance. Failure to comply with AML regulations can result in fines imposed on financial institutions. Furthermore, individuals involved in money laundering activities are subject to imprisonment upon detection.