MULTI-STAKEHOLDER ENGAGEMENT CALLS FOR BROADER DATA SHARING ACROSS GOVERNMENT FOR EARLY DETECTION OF MONEY LAUNDERING AND TERROR FINANCING

By: Abram Phahlamohlaka

• Data sharing across government departments, law enforcement agencies, and the private sector can assist in the early detection of suspicious activities from vulnerable non-profit organisations (NPOs).
• The issue of data sharing was at the heart of discussions during the second day of a multi-stakeholder meeting addressing regulatory and funding deficiencies within the NPO sector.
• Until the Financial Action Task Force put South Africa on the grey-list, most funders used to disperse funds to NPOs without first checking the compliance status of the organisations with the Department of Social Development.

Discussions on the second day of the multi-stakeholder engagement symposium convened by the Department of Social Development on the implementation of Recommendation 8 of the Financial Action Task Force (FATF) focused on the need for data sharing across government and the private sector.

Recommendation 8 requires countries to protect non-profit organisations (NPOs) from terrorist financing abuse through a risk-based implementation of strengthened measures.

Data sharing among government departments, law enforcement agencies, and the private sector can assist in early warning and detection of suspicious activities from NPOs that are vulnerable to money laundering and terror financing.

This, the symposium heard, will enable more effective prevention and mitigation of suspicious transactions by regulatory bodies.

A case in point is that up until the FATF put South Africa on the grey-list, most funders used to disperse funds to NPOs without first checking the compliance status of the organisations in question with the Department of Social Development, which serves as the NPO regulator in terms of the Non-Profit Organisation Act.

Working together

The delegates from various organisations unanimously agreed that a silver lining from the FATF’s grey-listing is that it has brought together key role players in the NPO and financial sector to address regulatory and funding deficiencies. Previously role players had worked in silos.

The South African Revenue Service’s Kgoloko Sekosana lamented that government information systems currently operate in silos where data from one government department or entity is held separately from the data of other departments

“Sharing data is one of the key ways that we can address issues of money laundering and terror financing beyond the FATF’s grey-listing.

“Creating systems where government data can be shared across organisational boundaries, including the private sector can unlock better data integration across sectors,” added Sekosana.

The need for data sharing was also emphasised by the National Lotteries Commission’s Chad Reevel.

In his presentation, Reevel noted that, through data sharing, the National Lotteries Commission could have prevented some of the fraudulent activities involving ghost NPOs that were established for the purpose of siphoning large sums of money from the commission over the years.

As a result, a number of NPOs are currently being investigated by the Special Investigating Unit.

Funding concerns

Symposium participants also expressed concerns about the impact of the recent executive order by the President of the United States to cut funding to NPOs in South Africa.

The government of the United Kingdom has also announced a significant cut in overseas aid to NPOs, including those based in South Africa.

There was consensus that this is likely to make many NPOs that are solely dependent on funding, vulnerable to money laundering and terror financing.

The multi-stakeholder engagement concludes on 5 March 2025 with the adoption of a national declaration to combat money laundering and terror financing in South Africa.

This takes place as the country prepares for the FATF’s onsite visit in September to evaluate the measures taken by South Africa to exit the grey-list.