Money laundering and countermeasures : a comparative security analysis of selected case studies with specific reference to South Africa

Abstract

This study focuses on examining the security implications of money laundering and countermeasures, with reference to South Africa. The purpose of this study was to establish the following: <ul> <li> What is the extent, and what are the security implications of money laundering in South Africa;</li> <li> whether the current money laundering countermeasures in South Africa were effectively implemented from 1994 up to the end of 2006;</li> <li> if South Africa could implement better money laundering controls when compared to the G7/8 countries; and</li> <li> what the factors were that influenced money laundering in South Africa, compared to the G7/8 countries</li> </ul> This study also examined the validity of the following assumptions: <ul> <li>That there are still shortcomings in the practical application of money laundering countermeasures in South Africa, despite these countermeasures being based on the legislative measures adopted by the G7/8 countries; and</li> <li> money laundering promotes crime and corruption in South Africa.</li> </ul> An analysis of the South African anti-money laundering legislation indicated that South Africa had legislatively adopted all of the Financial Action Task Force money laundering recommendations. It was found that despite the strong legislative framework to combat money laundering in South Africa, these efforts were undermined by a lack of capacity; poor coordination that led to a large volume of reports being filed without a corresponding track record of successful prosecutions; and the failure to adopt advances in information technology. This led to a lack of effectively and efficiently translating the anti-money laundering legislation into practice in South Africa.