Posted on Monday, 21 July 2014 15:42

South Africa to crackdown on illegitimate financial transactions

By Crystal Oderson in Cape Town

Photo©ReutersSouth Africa is set to amend its Financial Intelligence Centre Act, in an effort to curb fraudulent money transactions and identity theft the country.

Addressing Members of Parliament in Cape Town during the Treasury Budget Vote, newly appointed Deputy Minister of Finance, Mcebisi Jonas said the amendments would ensure more accountability from financial institutions.

He said this would ensure that it is easier for banks to take on new customers, but also be able to look at people buying huge assets and investigate the legality of such transactions.

The FIC Act sets up a regulatory anti-money laundering regime, which is intended to break the cycle used by organised criminal groups to benefit from illegitimate profits.

Jonas said over the past five years, the FIC investigated close to 5,000 cases and had assisted police in prosecutions, with about R1,1 billion ($100 million) in assets recovered.

"The FIC has assisted in fraud and money laundering cases, but the investigations remain the domain of law enforcement agencies," he explained.

According to a recent study by credit bureau, Compuscan, which has analysed statistics from the South African Fraud Prevention Service, more than R1 billion is lost in identity fraud alone.

Some of the success stories of the FIC include shutting down pyramid schemes that swindled thousands of rand from innocent consumers.

Pyramid schemes entice clients to invest on the fraudulent promise their investments will earn higher interest if they recruit more investors.

Jonas said the FIC's caseload had increased by 141% from an annual 355 cases to 623.

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