Top banking CEO warns of South Africa’s next big own-goal: report

A possible greylisting of financial institutions in South Africa would be another own goal for South Africa after the civil unrest in July last year and a subsequent rating downgrade, says FNB CEO Jacques Celliers.
In a recent interview with the Sunday Times, Celliers said that if the international watchdog, the Financial Action Task Force (FATF), could extend its deadline, it could help South Africa dodge the listing.
The FATF recognised flaws within the country’s financial system that allowed for money laundering, terrorist financing and other financial crimes to occur. Subsequently, it gave South Africa until October to prove that it has a credible plan to address deficiencies.
Failing to provide such would result in the country being greylisted in February next year, making business even harder to conduct.
In terms of a possible extension, the FATF said that the discussions of its plenary and the body’s decision-making body were confidential, and the outcomes would only be announced in October.
“Maybe we might be lucky and get a bit of grace to remedy some of the gaps that have been identified by the investigators,” said Celliers.
“There is an expectation that we will be recognised for the hard work the country has put in — not just the banks, all the sectors, the regulators and law enforcement. We hope that those will go a long way to prove that we could get an extension before they take their final decision.
The CEO said that if the country did not get the extension, the government and big businesses’ focus would shift to how quickly the country could reverse it. Other countries across the globe have been able to get back from a greylisting quickly, he added.
Other banking figureheads such as Capitec have chimed in on the possible greylisting with its chief information officer. Wim de Bruyn, Capitec’s chief information officer, said that the bank was actively working with the South African Reserve Bank (SARB) on avoiding the greylisting.
De Bruyn told BusinessTech that the banking industry as a whole is doing everything it can and is cognisant of the new tweaks, enhancements and additional requirements that are being put in place to mitigate financial crime in the country.
“If it were to happen, we are planning for what impact it may have,” he said. Capitec, as primarily a retail bank, will, however, see less of an impact compared to banks that conclude lots of cross-border transactions.
The group’s executive for the retail bank division, Graham Lee, said that the possible greylisting also falls on the shoulders of the government and what it plans to do as some of the recommendations made by the FATF relate to the criminal justice system and the ability to detect and prosecute unsavoury financial activity.
Other views in the local banking sector vary. Nedbank CEO Mike Brown suggested that the possible greylisting wouldn’t be as bad as a credit rating downgrade and, while not ideal, the country would be able to weather the storm.
Standard Bank CEO Sim Tshabalala, meanwhile, said that the greylisting would be far worse than a downgrade and would impact the country deeply.
The Department of Justice and Constitutional Development recently said that a greylisting would have dire consequences on the country’s economy – reducing investor confidence and having a negative impact on financial wellbeing.
The department so far has, among other actions, created the Anti-Money Laundering (AML) Desk within the National Prosecuting Authority (NPA) to investigate and prosecute financial crimes, improved processes within the NPA’s International Cooperation Unit and increased staff capacity at its head office.
The creation of the Anti-Money Laundering (AML) Desk within the National Prosecuting Authority (NPA). The desk has formulated an Anti-Money Laundering Desk Strategy, which covers the investigation and prosecution of money laundering and terrorist financing.
The NPA’s International Cooperation Unit’s processes have been improved in respect of referrals relating to foreign predicate offences.
The government has also undergone legislative action, with Cabinet pushing through new bills in a flurry to try and meet the FATF’s deadline requirements.
One of the most influential new pieces of legislation is the Anti-Money Laundering and Combating Terrorism Financing Amendment Bill that, once in law, will align the country with some of the recommendations made by the FATF, said the National Treasury.
The bill makes amendments to four key financial acts, changing wording and responsibilities to better secure South Africa’s financial systems from money laundering and terrorism financing:

Trust Property Control Act;
Nonprofit Organisations Act;
Financial Intelligence Centre Act;
Companies Act, and;
Financial Sector Regulation Act.

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