South Africa

1. Does South Africa have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. The legislation is as follows:

• Financial Intelligence Centre Act, 38 of 2001 (“FICA”);
• Prevention of Organised Crime Act, 121 of 1998 (“POCA”);
• Protection of Constitutional Democracy Against Terrorist and Related Activities Act 33 of 2004
• Prevention and Combatting of Corrupt Activities Act, 12 of 2004

2. To whom does the legislation apply?

To natural and juristic persons, such as attorneys, board of executors or a trust company, estate agents, a person who carries on the business of a bank as defined by the Banks Act as well as members of a stock exchange.

3. What does the legislation prohibit?

The FICA prohibitions are as follows:

• Transactions involving anonymous clients or clients with false names
• The concealment of suspicious and unusual transactions/activity
• Failure to report the electronic transfer of money to and from South Africa in excess of the prescribed amount, presently being R24 999.99 or an aggregate of smaller amounts which combine to this amount
• Failure to provide reports such as the terrorist property report, cash threshold report, terrorist financing report, containing the name and identifying particulars, the registration number and the contact address of the accountable institution

POCA prohibits a person who knows or ought reasonably to have known that property is or forms part of the proceeds of unlawful activity from entering into an agreement or transaction with anyone in connection with that property whether or not the agreement is legally enforceable. It further prohibits the person from performing any other act in connection with such property, which has the effect of concealing or disguising the nature, source, location, disposition or movement of the said property.

The Protection of Constitutional Democracy Against Terrorist and Related Activities Act prohibits any person who directly or indirectly acquires, collects, uses, possesses or owns property, provides and makes available or invites a person to provide or make available property, financial or other services, or economic support, facilitates the acquisition, collection, use or provision of property or the provision of any financial or other service, or the provision of economic support in the context of the commission of crime.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

FICA states that “any person who knows or ought to have known that property is or forms part of the proceeds of unlawful activities and enters into any agreement or engages in any arrangement or transaction with anyone in connection with that property…or performs any other act in connection with such property…and is likely to have the effect of concealing or disguising the nature, source, location, disposition or movement of the said property or its ownership or any interest which anyone may have in respect thereof; or which has the effect of enabling or assisting any person who has committed or commits an offence whether in the republic or elsewhere to avoid prosecution” shall be guilty of an offence of money laundering.

As money-laundering is considered a crime, the elements of a crime have to be proven.

5. What level of intent or knowledge is required to establish a violation?

The legislation requires knowledge or reasonability to have known about the offence in order to establish a violation.

6. What are the potential penalties for infringing the legislation?

In terms of regulation 29 of the FICA regulations regarding money laundering, any person or institution convicted of an offence under the regulation is liable to imprisonment for a period not exceeding three years or a fine not exceeding R1 million.

The Prevention of Organised Crime Act states that any person convicted of an offence of money laundering, assisting another to benefit from proceeds of unlawful activities as well as acquisition, possession or use of proceeds of unlawful activities, shall be liable to a fine not exceeding R100 million, or to imprisonment not exceeding 30 years.

The Protection of Constitutional Democracy Against Terrorist and Related Activities Act imposes a penalty of a fine not exceeding R100 million or imprisonment for a period not exceeding 15 years in a case of a sentence to be imposed by a High Court or a regional court.

7. Does the legislation have extra-territorial reach?

Section 35 of the Prevention and Combatting of Corrupt Activities Act, 12 of 2004 states that whether an offence occurs outside of South Africa, a court of South Africa has jurisdiction in respect of that offence if the accused is a citizen of South Africa, is a company, incorporated or registered under such law, an ordinary resident or was arrested in the territory of South Africa, or in its territorial waters or on board a ship or aircraft registered or to be registered in South Africa at the time the offence is committed. The Act further makes provision for offences committed outside of South Africa to be deemed to have been committed in South Africa if an offence affects or is intended to affect a public body, a business or any other persons in South Africa, if a person is found to be in South Africa and if a person is not extradited by South Africa or there is no application to extradite that person.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

The legislation referred to in question 1 above has regulations which in certain instances impose additional obligations mostly applicable to the financial services sector such as banks.

9. What are the potential penalties for failing to comply with these obligations?

See question 6.

10. Who are the relevant enforcement authorities in South Africa and what are their contact details?

The following institutions are responsible for investigating corporate crimes: