SOUTH AFRICAN AUTHORITIES INVESTIGATING FIFTY NON PROFIT ORGANIZATIONS FOR TERRORIST FINANCING AND MONEY LAUNDERING

Reports from South Africa confirm that regulatory and law enforcement agencies have approximately fifty non profit organizations under investigation for terrorist financing and money laundering, responding to a deficiency listed by the Financial Action Task Force in AML/CFT. While countering the financing of terrorism is states to be a major concern, money laundering and tax evasion are also listed as part of the ongoing investigation.

Given the large number of targeted NGOs, none of which have been publicly identified, compliance officers at SA banks and non-bank financial institutions should reduce risk levels by conducting new due diligence procedures on clients that declare themselves to be non-profits, to rule out the possibility that any which were approved at account opening are now engaging in illegal activities.

Questions to answer: Are there any new signatories on NGO accounts since account opening? They should themselves be subject to due diligence; have any NGO clients added additional addresses, new missions, international operations, funds transfers abroad, payments to high-risk jurisdictions, or any other new activities which might indicate illicit activity? Follow up on any positive indicators, to rule out AML/CFT issues, and thoroughly document all the findings, reporting them up your chain of command.