FINANCIAL INTELLIGENCE CENTRE

1. FINANCIAL INTELLIGENCE CENTRE Briefing to the Portfolio and Select Committees on Finance MEMORANDUM OF UNDERSTANDING OF THE EASTERN AND SOUTHERN AFRICAN ANTI-MONEY LAUNDERING (ESAAMLG) 25 JUNE 2002

2. FINANCIAL INTELLIGENCE CENTRE Objectives of the Briefing: To brief the Committees on the Approval by Cabinet for the signing of the Eastern and Southern African Anti-Money Laundering Group ESAAMLG Memorandum of Understanding within the context of: • The establishment of the FIC within an regional institutional context • The Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) • The ESAAMLG Memorandum of Understanding • Relationship to the Financial Action Task Force (FATF)

3. FINANCIAL INTELLIGENCE CENTRE Background – • Proposal to establish a regional anti-money laundering group in Africa first recommended at workshop held in South Africa in October 1995. • Eastern and Southern African Anti-Money Laundering Group (ESAAMLG) launched at meeting of Ministers in Tanzania, 1999. • Memorandum of Understanding (MOU) acts as the base document for active membership – but SA still to sign.

4. FINANCIAL INTELLIGENCE CENTRE ESAAMLG Memorandum Of Understanding (MOU) –Key elements ESAAMLG objectives: • Adopt and implement the 40(+8) Recommendations of the FATF; • Apply anti-money laundering measures to all serious crimes; • Implement measures contained in multi-lateral agreements and initiatives to which they subscribe for the prevention and control of the laundering of proceeds of all serious crime.

5. FINANCIAL INTELLIGENCE CENTRE MOU (cont) • Members of the ESAAMLG/ Signatories to the MOU • Kenya • Malawi • Mauritius • Mozambique • Namibia • Swaziland • Seychelles • Tanzania • Uganda • ESAAMLG Countries which have not yet signed the MOU • Botswana • Lesotho • South Africa • Zambia

6. FINANCIAL INTELLIGENCE CENTRE MOU (cont) • Provision made for Co-operating and Supporting Nations • Countries which express support for ESAAMLG objectives & have undergone positive FATF mutual evaluation process; • US, UK. • Provision is made for observer countries & organisations • Commonwealth Secretariat • UN Global Programme Against Money Laundering • Financial Action Task Force (FATF) Secretariat • World Bank & International Monetary Fund • Interpol • World Customs Organisation • African Development Bank • Southern African Development Community Secretariat • Common Market for East and Southern Africa Secretariat • East African Community Secretariat; and the • East African Development Bank.

7. FINANCIAL INTELLIGENCE CENTRE MOU (cont) • Funding • Annual membership subscription of US $ 20, 000 • Structure • Ministerial Council – annual meeting • Task Force of Senior Officials – twice-annual meeting • Secretariat – based in Dar Es Salaam • Ministerial Council • Key decision making body • Consists of Ministerial representative • Annual meeting • Elect office-bearers (President and vice-president) • Approve: financial report; work programme; secretariat; audit; adopt policy; approve new members; etc

8. FINANCIAL INTELLIGENCE CENTRE MOU (cont) • Task Force of officials • Members represented by senior official • Meet twice annually • Prepare for Council meetings • Monitor work of Secretariat • Secretariat • Perform technical duties • Implement work programme, including - • assessment processes, training, facilitate and liaise with third parties, monitor AML developments; • Submit to the Task Force - • annual report; financial reports; work programme; budget

9. FINANCIAL INTELLIGENCE CENTRE MOU (cont) • National Committees/ FIUs • All member countries will establish FIU’s • Self-Assessment/ Mutual Evaluation • All member countries will agree to undergo self-assessments and mutual evaluations • Language • English

10. FINANCIAL INTELLIGENCE CENTRE ESAAMLG is regional-style body of the Financial Action Task Force (FATF) • FATF is de facto international coordinating body responsible for combating money laundering • Consists of twenty-nine member countries and two regional bodies. • Has developed a set of Recommendations which set global standard for anti-money laundering (AML) and combating financing of terrorism (CFT) • Recommendations known as FATF 40+8 • Minimum criteria FATF membership: • Full political commitment to FATF objectives, • Implementation of 40+8 Recommendations (legislative framework; ‘STR’s’; and ‘KYC’ obligations), and • Active participation relevant FATF-style regional body (ESSAMLG) • FIC Act means SA largely complies with FATF – • SA wishes to become member of the FATF • SA also required to become active member of the ESAAMLG.

11. FINANCIAL INTELLIGENCE CENTRE ESAAMLG (and FATF) membership important: • ESAAMLG membership required for FATF compliance • Obviates pressure to place SA on FATF list of NCCT/ blacklist; • Creates opportunity for use of expertise and experience in the region; • Money laundering cannot be dealt with in isolation by one country;   • Regional cooperation will further strengthen SA anti-money laundering regime; • Business (esp financial sector) increasingly faces AML questions from international counterparts re compliance, & membership of international bodies. Pressure growing post Sept 2001.

12. FINANCIAL INTELLIGENCE CENTRE Process and Interaction with FATF and ESAAMLG • FATF - • Delegation visited (May); SA political commitment given • Membership application process under way • Plenary meeting approval (June) • Invited as observer to Plenary – October 2002 • Evaluation process in March 2003 • Membership from June 2003? • ESAAMLG • Officials meeting in Dar-es-Salaam • Cabinet has approved that Min of Fin should sign MOU • Active membership from August • Ratification by Parliament required thereafter.

13. FINANCIAL INTELLIGENCE CENTRE ends 25 JUNE 2002

15. Argentina; Australia; Austria; Belgium; Brazil; Canada; Denmark; Finland; France; Germany; Greece; Hong Kong, China; Iceland; Ireland; Italy; Japan; Luxembourg; Mexico; Kingdom of the Netherlands; New Zealand; Norway; Portugal; Singapore; Spain; Sweden; Switzerland; Turkey; United Kingdom; and United States. European Commission; and the Gulf Co-operation Council. FINANCIAL INTELLIGENCE CENTRE Annexure Financial Action Task Force Members

16. FINANCIAL INTELLIGENCE CENTRE Annexure FATF LIST OF NON-COOPERATING COUNTRIES AND TERRITORIES (NCCT) – June 2002 Cook Islands Nauru Dominica Nigeria Egypt Niue Grenada The Philippines Guatemala Russia Indonesia St Vincent & The Grenadines Marshall Islands Ukraine Myanmar (Burma) • Hungary, Israel, Lebanon and St Kitts & Nevisremoved, 21 June 2002

17. FINANCIAL INTELLIGENCE CENTRE Annexure FATF RELATIONSHIPS FATF • 29 countries represented • Membership by invitation • Country members • Policy matters FATF-style Regional Bodies South American Financial Action Task Force (SAFATF) Caribbean Financial Action Task Force (CFATF) • FATF-style Regional Body - ESAAMLG • (9 countries represented) • Country members • Regional policy matters Asia/ Pacific Group on Money Laundering (APGML)

18. FINANCIAL INTELLIGENCE CENTRE Annexure FIC Overall Architecture Internat. Links Investigative Authorities eg. Accountable Institutions sharing Supervisory Bodies (FSB) sharing SAPS FIC Bank Coordination Compliance Data storage Analysis Reports NDPP Insur- ance Reports Reports SARS Casino Awareness & training Investigations ML Advisory Council