The purpose of this presentation is to discuss efforts by the NPA and other law enforcement agencies to I dentify and investigate illicit financial flows related to crime P rosecute matters where there is evidence of a crime ID: 576280
Download Presentation The PPT/PDF document "1 Illicit Financial Flows" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
1
Illicit Financial FlowsSlide2
The purpose of this presentation is to discuss efforts by the NPA and other law enforcement agencies to: I
dentify and investigate illicit
financial flows related to crimeProsecute matters where there is evidence of a crimeForfeit assets where there is asset forfeiture potentialImprove controls by identifying systemic weaknesses and legislative gapsRecommend a way forward
1. Purpose of this presentation
2Slide3
Law enforcement can only deal with illicit money that is derived from criminal activityThus it cannot deal with money derived from unlawful activity that is not a criminal offence Asset
forfeiture
provides a possible exception as it can deal with unlawful activities that have not been criminalised2. Illicit money flows3Slide4
3. NPA and BEPSThus the presentation will not deal much with Base Erosion and Profit Shifting (BEPS) to the extent that is not criminal In addition, to investigate the complex mechanisms utilised in BEPS effectively requires very high level specialist capacity of accountants, business process specialists and othersIt is not aware of any criminal cases involving BEPS at the moment However, any BEPS related cases where there is a suspicion of criminal activity should be reported to the DPCI and NPA as soon as possible for assessment4Slide5
4 .Focus on suspected proceedsThe NPA has largely focussed its efforts on identifying, freezing and forfeiting proceeds of crime and prosecuting those who facilitate the flow of proceeds internally and across international bordersThis presentation focusses on the lessons learn from cases done by the NPA and working with different partners such as SARB, FIC and DPCI5Slide6
5. Lessons learnt from casesIn 2016 investigators identified new patterns of illicit money flows across different crime types involving unrelated suspectsIn August 2016 a working group was set up by various law enforcement agencies to verify the extent and veracity of the observations The group analysed and further investigated several casesand engaged with domestic and foreign law enforcement agencies and the private sector6Slide7
6. Background (cont)
The
group
identified a
new
modus
operandi
used by these syndicates to circumvent controls and avoid
detection , for example:
Controls
:
Exchange
controls regulations in relation to allowances and pre-payments of
goods
Avoiding
detection
:
Exploiting gaps in customer verification
processes,
eg that no customer verification is required for (very large) cash deposits in banksUsing these methods, 1 syndicate was able to smuggle currency or value of R2.1bn from the RSA in a short period
7Slide8
8
A significant increase in cash
seizures at ports of entry
Aug
15
–
ORTIA R23m
and
US$3.8m
Oct
15
–
ORTIA R 1.5m and US$15 000
Dec
15
–
Lebombo
R76m (US$5m, Euro22k) Feb 16 – ORTIA R15m (37kg unwrought gold) Apr 16 –
King
Shaka
R 7m Oct 16 – ORTIA R14.9mDec 16 – ORTIA R 4.2m in 4 incidents in 1 weekend.Dec 16 – King Shaka R12mFeb 17 – Bfn R21m Mar 17 – Beitbridge R 892 000 from a pedestrian
7. Observations on
crime operationsSlide9
Cash declaration reports not implemented due to admin burdenThe current Exchange
Control regime is
too narrow Cash seizure process is not based on international best practiceBetter training for law enforcement: eg some believe the area between the aircraft and customs/immigration is “no man’s land” where law enforcement may not operateThere is no KYC requirement for persons making cash deposits – even very large deposits can remain anonymous
8. Observations on systemic weakness 9Slide10
There is no electronic, searchable, centralised system to identify and individual interests in family trusts
High value negotiable instruments/commodities are
not included for customer identification requirements, and purchasers remain anonymousNo requirement to report suspicions purchases at retailersInformal money remitters – Hawala bankingLack of coordination in the illicit money flow environment between law enforcement and private sector
9. Observations in Systemic Weakness 10Slide11
10. Steps Forward
To work with the
DOJ&CD to
evaluate and
improve existing legislation relating
to
the detection and tracing of
f
amily trusts
the detection,
seizure and forfeiture of
cash
Create a
joint JCPS/Finance capacity to deal with illicit money flows
funded by the Criminal Assets
Recovery
Account
To
retain the
Counter Money Laundering Advisory Council envisaged in FICA to coordinate and facilitate illicit money flow and anti-money laundering initiatives within government and the private sector11Slide12
11. Steps Forward
To
work with the FIC and border management agency to implement cash declaration
reporting
Engage with the private sector to improve systems, controls, detection and reporting of illicit money
flows
To
work with the SARB to better enforce exchange control
regulations
Revise and improve training of law enforcement regarding cash seizures and financial investigations
To make cash seizures, money laundering and illicit money flows a strategic objective for the JCPS, SARB and the FIC – “all of Government approach”
Building sound relationships with our neighbouring countries and offshore jurisdictions to detect, trace and seize illicit money flows
12