Page 77 - IRMSA Risk Report 2023

According to meridian.org, “illicit economy, whether Government needs to be at the forefront, with a
Illicit trade is thriving because of its links to organised crime, which has become more in the form of human trafficking, arms smuggling, strong political will to stamp out illicit activities and
sophisticated over the years, making it even more difficult for the already stretched law counterfeiting, money laundering, cybercrime, corruption. More resources need to be provided to
enforcement agencies to bring perpetrators to justice.
Already stretched law or illegal wildlife trade, is a force stealing stability government departments to enable them to operate
enforcement agencies unable Intensified collaborative efforts and the use of a multi-stakeholder approach between from communities, causing corruption, impacting efficiently and eliminate kickbacks in the system.
the relevant government departments, agencies, law enforcement, business and
to respond to infringements communities would improve the situation. national security, and destabilising the lives of so Infrastructure and equipment also require consistent
and the enforcement of rules In addition, the capacity of the state to lead these efforts should receive priority through many around the globe”. SARS recommends that maintenance to keep them functioning at optimum
against illicit trade. every South African help stem the growth of illicit capacity, this to curb corruption and illegal activities
the appointment of skilled personnel and the appropriation of budgets that enable
the implementation of effective measures to prevent, detect and effectively prosecute economic activities by refusing to buy counterfeit through lack of monitoring during downtime.
these crimes. goods or contraband cigarettes; reporting poaching
incidents to SARS, the police and the Department of Appropriate staffing with individuals who are well
Environmental Affairs; and reporting informal trade skilled and committed to curbing criminal activities
The successful prosecution of offenders is often a challenge due to, amongst other
Lack of investment in digital reasons, the courts or legal system processing large volumes of cases. There is often in precious stones such as diamonds to SARS and is necessary for progress. In addition, zero tolerance
infrastructure required to a backlog that dates back years, impacting the ability to timeously process cases and the police. for illegal activities would see punitive sentences on
support digital services individuals and entities involved in illicit activities,
and lower costs of access secure deterrent sentences. The government needs to prioritise clearing the court- While SARS has made above-budget revenue thereby deterring would-be perpetrators.
(communications networks, system backlog, to ensure that offending parties are timeously brought to book. recoveries from illicit economic activities, there
Further, the rehabilitation and reintegration of past offenders to prevent a return to
data centres, security centres).
illegal activities is necessary. is still a lot that is going unhindered, such as: the Related to this, there is a need for relevant
scrap-metal industry; illegal mining; border-post legislation that supports a strong stance, which is
crime syndicates; the healthcare system; Eskom; the enforced through relevant government departments
Illicit activities tend to be penetrative and impact the fibre of society. It is a concern that theft of resources such as cable and coal; local and including the security forces and the legal system.
A lack of public education and there are no formal measures in place to educate civil society on the impact of the illicit
awareness as to the negative national government tenders; home affairs; and the The financial sector requires better transaction
impact of illicit activities economy, both through formal and informal education systems. Civic organisations transport system, among others. monitoring to identify financial flows from illegal
impacting the moral fibre of and professional bodies should assist with providing material and platforms to create activities and corruption.
awareness and provide an introduction of material on the dangers of the illicit economy
society. The rationale for developing and implementing the
through the formal education system.
Integrated Social Crime Prevention Strategy (ISCPS) Food scarcity in the country, as well as the available
is to enable government departments to respond to arable land, presents an opportunity for individuals
Corruption combined with weak capacity and vested interest neutralises the political crime-related issues in a coordinated and focused reforming from illicit activities to be given an
will to decisively address this risk. Instead, corruption has undermined the state’s manner, specifically looking at issues causing crime. opportunity to acquire much-needed farming skills
Continued endemic corruption
undermining the activities of capacity and provided criminal elements with power and influence over the very The ISCPS has put together various frameworks for so that they have a new and legal source of income
the institutions which are trying institutions meant to combat it. Decisive action should be taken in implementing and troubled sectors. It has executed investigations (with through farming.
following through the recommendations of the State Capture Report to investigate
to curb illicit trade. some still in progress) and defined several response
and prosecute perpetrators of systemic corruption. This should serve as a deterrent to strategies to fight the illicit economy. Professional It is only through collective efforts with the public
would-be perpetrators.
bodies and civic organisations can assist in driving and private sectors, together with civil society, that
awareness on illegal economic activities. The we will have a chance to effectively implement
At the end of 2022, the Financial Action Task Force (FATF) placed South Africa on education system needs to incorporate lessons on global solutions to combat the interconnected illicit
the so-called grey list. This was a necessary step for the country to tighten up the various types of illicit trades and how the public can economies.
financial system to protect against money laundering and the financing of terrorism and prevent, as well as report, such activities.
weapons of mass destruction in line with FATF’s standards. At the end of November
2022, Schedule 1 of the Financial Intelligence Centre Act (FICA, 2001) was amended to
Inadequate transaction add several new categories of accountable institutions for compliance with FICA with
monitoring in the financial significant penalties, including imprisonment for a period not exceeding 15 years or a
sector. fine not exceeding R100-million.
The Financial Intelligence Centre will be monitoring the new accountable institutions,
to ensure compliance, get South Africa off the grey list as soon as possible and reduce
illicit financial transactions.

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