Money laundering and the impact thereof on selected African countries : a comparative study

Abstract

The variations that exist in the definitions or interpretations of money laundering is not relevant to the actual meaning of the term money laundering, but rather to the transactions that could be indicative of money laundering. Therefore money laundering becomes easier when poorly legislation creates loopholes that can be demoralised by criminal syndicates and terrorist financing. Since 1996, the South African Reserve Bank has been in negotiations with the International Monetary Fund (IMF), the United States Federal Reserve Bank and many European financial institutions to ensure that South Africa can compete in the International sphere. To comply with International banking standards, South Africa has promulgated a number of laws, for example The Prevention of Organised Crime Act of 1996, The Proceeds of Crime Act of 1997, The Money Laundering Control Act of 2000 and The Financial Intelligence Centre Act of 2003. Money laundering attracted increasing interest since the late 1980‘s. To control the increase in money laundering, a number of initiatives were adopted, for example the Financial Action Task Force on money laundering in 1989. The Eastern and Southern African countries also formed the Eastern and Southern Africa Anti-Money laundering Group (ESAAMLG) in 1999. The advances in technology and particularly electronic funds transfers brought a dramatic increase in organised crime. In respect hereof, South Africa received attention in terms of The Prevention of Organised Crime Act 121 of 1998 as well as the Financial Intelligence Centre Act 38 of 2001 to prevent the increase of money laundering. With South Africa returning into the International sphere, South Africa is becoming increasingly attractive to the practical dilemmas of money laundering. Certain challenges on money laundering have an impact on legislators, both in South Africa and Africa. These challenges include criminal syndicates profiting from criminal activities to financing of terrorism such as 11 September 2001. By using South Africa as an example against the selected African countries, it is indicated how the certain implications of money laundering undermine the legitimate private sector. One way to address the challenges of money laundering is that legislators must understand how these criminal syndicates operate as well as the terrorist financing thereof. This mini-dissertation gives an historical overview of what money laundering entails in South Africa as well as the selected African countries, the typologies thereof as well as the legislation dealing with money laundering in South Africa. It also provides the practical implications of implementing the money laundering measures in South Africa as well as the selected African countries against the background of the challenges and realities thereof. Money laundering is difficult to measure, but a preliminary attempt was made to give recommendations on this global predicament.