Are you faced with an ethical dilemma? Are you witnessing corruption but don’t know what to do about it? Ask the team of Corruption Watch experts what to do by writing to: email@example.com and mark your letter ‘Dear Corruption Watch’.
I work for a private bank and we have many high-net-worth public servants as clients. We have, from time to time, noticed large transfers of money coming in to a handful of these accounts and duly report them to the department in the Treasury which monitors such things.
Recently, several million rand was deposited into an account and billed as a "consultancy fee". If a bank suspects a private client is conducting himself corruptly, is it under any other obligation to report it, and to whom? Yours sincerely, Nervous
South Africa has adopted money-laundering laws to help it comply with its international obligations to fight organised crime. The obligations of banks are contained in three different sets of legislation: the Banks Act 94 of 1990; the Prevention of Organised Crime Act 121 of 1998 and the Financial Intelligence Centre Act38 of 2001 (Fica).
Fica has created money-laundering control obligations for banks and other institutions, such as estate agents, brokers, attorneys and insurance companies.
The Financial Intelligence Centre (FIC) was established to assist in the identification of the proceeds of unlawful activities and to combat money-laundering activities. It does so by analysing information it receives from institutions, like banks, that are obliged by law to report suspicious transactions.
Customer identification is a crucial element of any effective money-laundering control system. As an employee of a bank, you are required by law to know who your clients are, what work they do and, most importantly, their source of income.
This obligation comes from section 21(1) of Fica, which says that a bank may not establish a business relationship or conclude a single transaction with a customer unless they have taken steps to, among others, establish and verify the identity of the customer. This includes obtaining a customer's full name, date of birth and identity number and verifying this information by comparing the person's identity document.
The underlying principle of this obligation is that institutions must know who they are doing business with.
Another obligation under Fica is the requirement to keep records of customers' transaction activities. Banks are obliged, in terms of section 28 of Fica, to report suspicious transactions, like the one you describe, to the FIC.
The purpose of this requirement is to ensure that transactions can be reconstructed during an investigation, clearly indicating not only what transpired, but also who was involved.
Any unusual activity in any one of your clients' accounts must be flagged as suspicious and followed up. An unusually large deposit into your client's account – like the one you describe – warrants following up.
I suggest that you inform your manager of your concerns immediately and that the bank reports this transaction to the FIC.
The procedure for reporting suspicious transactions is as follows: A cash threshold report must be sent to the FIC as soon as possible, but not later than two business days after the bank becomes aware of a suspicious transaction or a cash transaction over R24 999.99.
If you are in any doubt about what to do, or whether a particular transaction is suspicious, I suggest that you contact the FIC for advice at: 0860342 342.
You should also be aware that your failure to report suspicious financial transactions could expose your bank to a R100-million fine and the directors of the bank to a 15-year jail term.
Take a stand and report an incident of corruption. This article originally appeared in the Sunday Times Business Times on 29 July 2012.