Isn’t it curious how interrelated the financial news in South Africa has become of late, without attention being drawn to this fact? Take the Financial Action Task Force (FATF), for instance.
On August 30, South African Revenue Service (Sars) commissioner Edward Kieswetter issued a joint media release titled ‘New legislative tool targeting unexplained wealth to be piloted’ with the director of the Financial Intelligence Centre, the national head of the Directorate for Priority Crime Investigation, the chairperson of the Anti-Corruption Task Team and the national director of Public Prosecutions, in which the FATF is mentioned.
As for the FATF, cast your mind back to the piece published in this column on July 22, ‘Shades of greylisting’, which cited an article published on www.polity.org.za, which stated: “South Africa is facing greylisting by the international FATF, the global money- laundering and terrorist financing watchdog. This will have serious repercussions for the economy’s links to the global financial system and the last thing South Africa needs right now is another obstacle to doing business, along with yet another reason for foreign investors to shun the country.”
Is the ‘new legislative tool’ an attempt by government to ultimately prevent the country’s greylisting? If so, why not simply reference greylisting?
The opening paragraph of the August 30 media release states: “An initiative being piloted by a number of government departments and agencies in law enforcement and prosecution will make it more cost-effective, faster and easier to investigate and recover assets acquired through suspected unlawful activities such as corruption, fraud, tax evasion and money laundering.” The agencies cited “are collaborating on the joint project to deprive those who support their lifestyles with ill-gotten gains of their unexplained wealth”.
Apparently, the collective effort will “better enable” the confiscation of criminal proceeds in line with the FATF recommendations. The media release adds: “The law-enforcement agencies will use existing asset recovery legislation to secure appropriate orders issued by our courts to confiscate unexplained wealth, thereby enabling the South African authorities to recover suspected ill-gotten gains. The provision in our existing asset recovery legislation that targets unexplained wealth is a legislative tool that requires the State to prove that a defendant’s legitimate sources of income are not sufficient to justify assets that the defendant owns. This puts the onus on the defendant to prove that the source of the funds for the assets owned is legitimate and that the assets were not acquired from the proceeds of criminal activities. A court can therefore make an order to confiscate unexplained wealth on the basis that the wealth of a person or entity is disproportionate to the lawful income derived or declared by the person or entity and that the defendant is unable to justify or explain how the wealth was lawfully acquired. This approach will enable law-enforcement agencies and Sars to act even in cases where such unlawful activity cannot be proven beyond reasonable doubt.”
In the UK, they have Unexplained Wealth Orders, which allow for the confiscation of property without proving criminality by reversing the burden of proof.
Evidently, “preparatory activities . . . are currently in progress in order to select an appropriate case to test the existing provisions that target unexplained wealth in the courts”. A single case? Is this what is meant by ‘targeting’? And just how long is all this going to take? Will the ‘appropriate case’ be fast-tracked through the court system?
But the clock is ticking, which begs the question: What will the FATF make of this ‘initiative’? Will it be convinced that government is doing something or merely attempting to do something? Will this ultimately stop or delay the possibility of the FATF greylisting South Africa?
As Bruce Lee so eloquently reminds us, “if you spend too much time thinking about thinking, you will never get it done”.