Global Courant 2023-05-19 14:14:44
Finance Minister Enoch Godongwana says efforts to take the country off the gray list are well underway, with the Financial Intelligence Center (FIC) allocating more than R265 million for the medium term.
Godongwana delivered his speech on the budget vote in parliament on Tuesday, saying it is part of measures to respond to the country’s recent graylisting by the Financial Action Task Force (FATF).
“As part of the response measures to the country’s recent greylisting, the Financial Intelligence Center has been allocated additional medium-term funding of over R265 million to implement the recommendations of the Financial Action Task Force and the country to be released from the gray list,” said Godongwana.
- Advertisement -
Earlier this year, the Paris-based anti-money laundering watchdog added South Africa to the list of countries it will monitor to ensure implementation of anti-money laundering and terrorism financing rules.
Godongwana said the government will implement the recommendations of the Financial Action Task Force, with his department periodically updating the cabinet on progress.
Last year, the minister said, the government led an unprecedented process to pass an omnibus of legislative amendments addressing gaps in SA’s anti-money laundering regime.
“The National Treasury, as the leader of the Interdepartmental Committee on Anti-Money Laundering and Countering the Financing of Terrorism, continues to coordinate efforts across the government to fully address remaining weaknesses in our justice system,” he said.
Godongwana said one of many examples is the frozen assets of individuals and entities identified by the United Nations as being associated with ISIS, the Taliban and Al Qaeda.
- Advertisement -
He said they have updated and strengthened systems for monitoring non-financial companies at risk of being used for money laundering or terrorist financing.
“We have also strengthened the systems necessary to identify the beneficial owners of companies and trusts so that they cannot hide behind the veil of trade secrets when engaging in money laundering.”
Godongwana said these updates have been submitted to the FATF and a positive reassessment of technical compliance with FATF standards can be expected in the next six months.
- Advertisement -
Godongwana has announced that National Treasury has allocated a total of R34.9 billion for fiscal year 2023/24.
“Due to the dire economic situation, urgent and well-considered actions are required. The National Treasury’s budget vote aims to help promote higher and more inclusive economic growth, address fiscal vulnerability and stabilize public finances. These are prerequisites for tackling poverty and unemployment,” he said.
The minister said 85% of the budget will be allocated for transfers and grants, mainly to the South African Revenue Service (SARS), State Security Agency, conditional grants to municipalities and funding for civilian and military pensions.
“The allocation to SARS is R12.2 billion and it is in support of the ongoing efforts to rebuild SARS. I am pleased to report that the efforts are paying off.
“SARS has experienced net tax revenue growth of 7% per year since 2019. Public confidence in SARS has also increased from 48% in 2018 to 66% this year, while public opinion on tax compliance stands at 76.5%, Godongwana said.
Getting municipal finances in order
With regard to municipalities, Godongwana stressed that decisive action is needed to restore the integrity of the sector.
“Unfunded mandates, overspending and ineffective revenue management practices have manifested themselves in many municipalities defaulting on payments to creditors and falling into financial and service crises.
“Furthermore, personnel expenditure displaces expenditure on services and investments. In response, the Ministry of Finance has placed 25 municipalities under mandatory intervention under S139(5) of the Constitution, while three municipalities are subject to mandatory intervention under S139(7),” he said.
The minister emphasized that professionalization of the administration of the municipalities is a crucial pillar to tackle these problems, in particular the training of chief financial officers and municipal managers.
He told MPs that the Ministry of Finance is supporting the nationwide roll-out of training to support the implementation of the Municipal Standard Chart of Accounts, in addition to a number of free tools and training opportunities.
“In the past 12 months, 31 special council induction sessions have been held for the 43 municipalities identified as being in a financial and service crisis. We are not resting on our laurels. Our interventions are starting to bear fruit,” Godongwana said.
Read: This is what South Africa needs to do to get off the gray list