South Africa: Money Laundering — The Duty to Report under the Law
| DOI | https://doi.org/10.1108/eb025984 |
| Published date | 01 April 2000 |
| Date | 01 April 2000 |
| Pages | 186-190 |
| Author | A. Itzikowitz |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 8 No. 2 — International
South Africa: Money Laundering —
The Duty to Report under the Law
A. Itzikowitz
Journal of Financial Crime
Vol.
8.
No.
2,
2000,
pp. 186-190
© Henry Stewart Publications
ISSN 0969-6458
Money laundering in South Africa received legisla-
tive attention as recently as 1992. The advances in
technology and particularly electronic funds transfers
brought a dramatic increase in organised crime.
Furthermore, with its return to the international
arena, South Africa was becoming increasingly
attractive for drug traffickers, not only as a transit
destination but also as an end destination. This'
paper gives a historical overview of the legislation
dealing with money laundering, focusing particularly
on the duty to report.
DRUG TRAFFICKING ACT 140 OF 1992
The first piece of legislation to impose a reporting
duty was the Drugs and Drug Trafficking Act. This
statute, which dealt only with drug-related money
laundering, required directors, managers and execu-
tive officers of financial institutions to report to the
authorities if they had reason to suspect that any
property acquired by the institution in the ordinary
course of business was the proceeds of
a
drug offence
or the conversion of property derived from it.1 A
similar duty was imposed on stockbrokers and dealers
in financial instruments.2
In so far as protection against breach of duty of
secrecy was given only if the suspicion related to a
drug offence, the persons concerned tended not to
report their suspicions. These provisions have now
been repealed by the Prevention of Organised
Crime Act 121 of 1998 ('POCA') discussed below.
PROCEEDS OF CRIME ACT 76 OF
1996
The Proceeds of Crime Act criminalised money laun-
dering not only in relation to drug trafficking, but in
respect of all criminal activities. In terms of this
Act3
any persons who carried on business or were in
charge of a business undertaking were obliged to
report to the Commander of the Commercial
Crime Investigations Subcomponent of the South
African Police Service4 if they had 'reason to suspect'
that property which came into their possession or the
possession of the business was the proceeds of crime.5
This provision was problematic in so far as it was not
clear how the phrase 'has reason to suspect' should be
interpreted — whether negligence or intention was
required for a conviction of an offence. Did the suspi-
cion have to exist in the mind of the person obliged to
report, or was it enough that it would have existed in
the mind of a reasonable person in his or her position?
If an actual suspicion was required, what was the
quality of the suspicion? Did it have to be reasonable
or would any suspicion suffice? Furthermore, it
was not clear who within the organisation was
obliged to report and whether the person could con-
tinue with the suspicious transaction once it was
reported.6
PREVENTION OF ORGANISED CRIME
ACT 121 OF 1998
The Proceeds of Crime Act was repealed by POCA,
which came into force on 21st January, 1999.7 POCA
is an omnibus Act dealing with racketeering, gang-
sterism, confiscation orders, civil forfeiture and
money laundering. The Act was amended by the Pre-
vention of Organised Crime Amendment Act 24 of
1999 (the Amendment Act) and again by the Preven-
tion of Organised Crime Second Amendment Act 38
of 1999. The term used in POCA is 'proceeds of
unlawful activity' not 'proceeds of crime', which
was the terminology used in the Proceeds of Crime
Act. '"Unlawful activity" means any conduct
which constitutes a crime or which contravenes any
law whether such conduct occurred before or after
the commencement of the Act and whether such con-
duct occurred in the Republic or elsewhere.'8 Section
2 of the Interpretation Act 33 of 1957 provides that
unless the context otherwise requires, the word
'law' when used in a statute means 'any law, pro-
clamation, ordinance, Act of Parliament or other
enactment having the force of law'. 'Any law' in
the definition of 'unlawful activity' would thus not
include the common law. Prior to the amendment
of the Act, the term was not defined, and would
have included not only statutory-type contraventions
Page 186
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