The reliance on customer due diligence to enhance the combating of money laundering under the Financial Intelligence Centre Amendment Act 1 of 2017

Abstract

Customer due diligence is a means of ensuring that financial institutions know their customers and customers are risk assessed before concluding any transactions with them . Customer due diligence measures include identification and verification of customer identity, keeping records of transactions concluded between a customer and the financial institution, ongoing monitoring of customer account activities, reporting unusual and suspicious transactions and risk assessment programmes. The regulation of anti-money laundering measures is crucial to the economic growth of many countries, including South Africa. However, there have been many challenges in the reliance on customer due diligence measures to combat money laundering in South Africa. The challenges include the failure to meet the identification and verification requirements by some South African citizens such that they are denied access to the formal financial sector and a lack of express provisions to regulate the informal financial sector by the Financial Intelligence Centre Act as amended. Accordingly, this research provides that South Africa should design measures that regulate the informal financial sector and context-sensitive customer due diligence measures that are applicable in South Africa without challenges. This approach could enable consistency in the application of customer due diligence measures in South Africa. In this regard , the researcher discusses the importance of consistently applying anti-money laundering laws to combat money laundering in South Africa.