Aspects of money laundering in South African law
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Authors
Van Jaarsveld, Izelde Louise
Issue Date
2011-04
Type
Thesis
Language
en
Keywords
Money laudering control , Banks , Financial Intelligence Centre Act of 2001 , Prevention of Organised Crime Act of 1998 , Money Laundering and Terrorist Financing Control Regulations of 2002 , Globalisation of criminal activity , Money , Bank-customer relationship , Bank confidentiality , Safe-harbour provisions , Ownership of deposited money , Proceeds of crime , Basel Committee on Banking Regulations and Supervisory Practices , Statement of Principles , Financial Action Task Force on Money Laundering , Council of Europe , Third Anti-Money Laundering Directive , KYC Standard , Customer due diligence , Vienna Convention , Strasbourg Convention , Proceeds of Crime Act 2002 , Bank Secrecy Act , Patriot Act , Financial Crimes Enforcement Network , Common-law ownership remedies , Constructive trust , Tracing , Rei vindicatio , Quasi-vindictory action , Actio Pauliana , Interdicts , Unjust enrichment condictiones , Civil forfeiture , Innocent owner defence
Alternative Title
Abstract
Money laundering involves activities which are aimed at concealing benefits that were acquired
through criminal means for the purpose of making them appear legitimately acquired. Money
laundering promotes criminal activities in South Africa because it allows criminals to keep the
benefits that they acquired through their criminal activities. It takes place through a variety of
schemes which include the use of banks. In this sense money laundering control is based on the
premise that banks must be protected from providing criminals with the means to launder the
benefits of their criminal activities.
The Financial Intelligence Centre Act 38 of 2001 (‘FICA’) in aggregate with the
Prevention of Organised Crime Act 121 of 1998 (‘POCA’) form the backbone of South Africa’s
anti-money laundering regime. Like its international counterparts FICA imposes onerous duties
on banks seeing that they are most often used by criminals as conduits to launder the benefits of
crime. In turn, POCA criminalises activities in relation to the benefits of crime and delineates
civil proceedings aimed at forfeiting the benefits of crime to the state. This study identifies the
idiosyncrasies of the South African anti-money laundering regime and forwards
recommendations aimed at improving its structure.
To this end nine issues in relation to money laundering control and banks are investigated.
The investigation fundamentally reveals that money laundering control holds unforeseen
consequences for banks. In particular, a bank that receives the benefits of crimes such as fraud
or theft faces prosecution if it fails to heed FICA’s money laundering control duties, for example,
the filing of a suspicious transaction report. However, if the bank files a suspicious transaction
report, it may be sued in civil court by the customer for breach of contract. In addition, if the bank
parted with the benefits of fraud or theft whilst suspecting that the account holder may not be
entitled to payment thereof, it may be sued by the victim of fraud or theft who seeks to recover
loss suffered at the hand of the fraudster or thief from the bank.
Ultimately, this study illustrates that amendment of some of the provisions of South
Africa’s anti-money laundering legislation should enable banks to manage the aforementioned
and other unforeseen consequences of money laundering control whilst at the same time
contribute to the South African anti-money laundering effort.
Description
Citation
Van Jaarsveld, Izelde Louise (2011) Aspects of money laundering in South African law, University of South Africa, Pretoria, <http://hdl.handle.net/10500/5091>