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”.
FATF Recommendation 8
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, NGOs, financial and non-financial regulators, and NGO 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, South Africa is now left with one reporting cycle. This will address the remaining six action items. National Treasury is the lead department in addressing the overall FATF recommendations.
Three of the outstanding action items relate to demonstrating a sustained increase in the investigation. This as well as prosecution of complex money laundering, terror financing and unlicensed cross-border money or value transfer services.
Focus on NGOs as culprits
FATF Recommendation 8 focuses on NGOs. Particularly 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 NGOs are at risk of being used for money laundering and terror financing, the department convened the multi-stakeholder engagement to inform the NGO sector of progress, create broader awareness, share best practice and promote better understanding of FATF global standards for NGOs,” the department said.
The symposium underscored the critical importance of civil society and NGOs in South Africa. This because they complement government and the private sectors in providing essential services to the most vulnerable groups and communities in society.
Key highlights
Some of the key highlights from the multi-stakeholder engagement symposium are as follows:
· No one size fits all approach. Not all NGOs are vulnerable to money laundering and terror financing. Some only operate within the borders of South Africa. FATF’s risk-based approach should be applied to high-risk NGOs.
· Data sharing across government and with the private sector/funders. The multi-stakeholder engagement symposium highlighted the need for data sharing agreements. These are agreements among government departments, law enforcement agencies and the private sector. The aim is to assist in early warning and detection of suspicious activities by high-risk NGOs.
Sector regulation
· Overregulation of the NGO sector. The NGO sector welcomed government’s proposed initiative and measures to comply with FATF’s global standards. And as part of implementing Recommendation 8, they cautioned against overregulating the sector.
They say this 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 is the need for the department to conduct more outreach in collaboration with other regulators. These include the Financial Intelligence Centre (FIC), South African Revenue Service (SARS) and the National Lotteries Commission (NLC).
· Establishment of an independent NGO regulator. It was recommended that the department should consider setting up the NGO directorate in its current form. This will function as an independent NPO regulator. A general consensus was that the department cannot play role of NGO funder and regulator at the same time.
· Continued commitment beyond FATF’s grey listing. All participants agreed to continue collaborating and improving coordination. This is including harmonisation of funding requirements. The symposium closed with a declaration signed and adopted by all participants. The commitment to combat all forms of money laundering and terror financing in South Africa.
Transparency in the sector
Acting Deputy Director-General: Community Development, Mpho Mngxitama, delivered closing remarks. He expressed gratitude to all participants and commended them for their unwavering commitment to exit South Africa from the grey list. For also improving transparency and accountability in the NGO sector.
“As FATF’s onsite visit approaches, it is now all hands-on deck. This is to expedite action on all outstanding items to exit South Africa from the grey list. And to do so on record time,” the department said. NGO Online Solution The department seized the opportunity to demonstrate the NPO Online Solution.
This is a self-service portal that will enable members of the public to register new NGOs. They can also check the status of their application and submit annual compliance reports. As well as voluntary deregistration, amongst others. The new innovative and streamlined DSD NPO Online Solution has a key feature.
It will be linked to the SARS and Companies and Intellectual Property Commission (CIPC) portals. The symposium agreed that a webinar will be organised to pilot the online solution before its national roll-out. This roll-out is envisaged for the new financial year.
- SAnews.gov.za
