Multi-stakeholder symposium reaffirms commitment to remove SA from FATF grey list
After thorough deliberations, a multi-stakeholder symposium -- hosted by the Department of Social Development -- has reaffirmed its commitment to resolving outstanding action items on Recommendation 8 and ensuring South Africa's removal from the Financial Action Task Force (FATF) grey list.
The three-day symposium was convened by the Department of Social Development under the theme: "Together Countering the Financing of Terrorism in the NPO Sector-Promoting Cooperation and Compliance with the Global Standards”.
In a statement on Friday, the department said the symposium was convened to focus specifically on FATF Recommendation 8 and was attended by representatives of government, civil society, Non-Profit Organisations (NPOs), financial and non-financial regulators, and NPO funding lobby groups.
“Since its grey listing by FATF in February 2023, South Africa has already made notable progress in complying with the global standards on the prevention of money laundering, terrorist financing and proliferation financing,” the department said.
According to National Treasury, which is the lead department in addressing the overall FATF recommendations, South Africa is now left with one reporting cycle to address the remaining six action items.
Three of the outstanding action items relate to demonstrating a sustained increase in the investigation and prosecution of complex money laundering, terror financing and unlicensed cross-border money or value transfer services.
FATF Recommendation 8 focuses on NPOs and the potential use of the sector as a vehicle for money laundering and terror financing. FATF has rated most of the action items under Recommendation 8 as partly addressed.
“Although FATF has made it clear that not all NPOs are at risk of being used for money laundering and terror financing, the department convened the multi-stakeholder engagement to inform the NPO sector of progress, create broader awareness, share best practice and promote better understanding of FATF global standards for NPOs,” the department said.
The symposium underscored the critical importance of civil society and NPOs in South Africa, as they complement government and the private sectors in providing essential services to the most vulnerable groups and communities in society.
Some of the key highlights from the multi-stakeholder engagement symposium are as follows:
· No one size fits all approach. Not all NPOs are vulnerable to money laundering and terror financing, as some only operate within the borders of South Africa. FATF’s risk-based approach should be applied to high-risk NPOs.
· Data sharing across government and with the private sector/funders. The multi-stakeholder engagement symposium highlighted the need for data sharing agreements among government departments, law enforcement agencies and the private sector to assist in early warning and detection of suspicious activities by high- risk NPOs.
· Overregulation of the NPO sector. While the NPO sector welcomed government’s proposed initiative and measures to comply with FATF’s global standards as part of implementing Recommendation 8, they cautioned against overregulating the sector, which has the potential to stifle community activism and active citizenry envisaged in the National Development Plan.
· Expansion of outreach and educational programmes. One of the key issues emerging from the multi-stakeholder engagement symposium is the need for the Department of Social Development to conduct more outreach in collaboration with other regulators such as the Financial Intelligence Centre (FIC), South African Revenue Service (SARS) and the National Lotteries Commission (NLC).
· Establishment of an independent NPO regulator. It was recommended that the Department of Social Development should consider setting up the NPO Directorate in its current form as an independent NPO regulator. There was general consensus that the department cannot play a dual role of being NPO funder and regulator at the same time.
· Continued commitment beyond FATF’s grey listing. All participants agreed to continue collaborating and improving coordination, including harmonisation of funding requirements.
The symposium closed with a declaration signed and adopted by all participants to combat all forms of money laundering and terror financing in South Africa.
Delivering closing remarks, the Acting Deputy Director-General: Community Development, Mpho Mngxitama, expressed gratitude to all participants and commended them for their unwavering commitment to exit South Africa from the grey list, as well as improve transparency and accountability in the NPO sector.
“As FATF’s onsite visit approaches, it is now all hands-on deck to expedite action on all
outstanding items to exit South Africa from the grey list on record time,” the department said.
The department seized the opportunity to demonstrate the NPO Online Solution, a self-service portal that will enable members of the public to register new NPOs, check status of their application, submit annual compliance reports and voluntary deregistration, amongst others.
A key feature of the new innovative and streamlined DSD NPO Online Solution is that it will be linked to the portals of the South African Revenue Service (SARS) and Companies and Intellectual Property Commission (CIPC).
It was agreed that a webinar will be organised to pilot the online solution before national roll out in the new financial year.
