Cooperation the key – Hain

TESTIMONY: HOUSE OF LORDS PEER OFFERS SOLUTION TO STATE CAPTURE

‘Countries need to work closer together to stamp out the scourge.’

Tightening international cooperation is among concrete remedial measures proposed by United Kingdom (UK) House of Lords peer and anti-apartheid activist Peter Hain to governments, international law enforcement agencies and corporates, to stamp out the scourge of state capture – a phenomenon which has adversely crippled economies of emerging countries.

Testifying yesterday before Deputy Chief Justice Raymond Zondo at the Commission of Inquiry into State Capture, Hain recommended:

Increased transparency on the beneficial owners of corporates by strengthening the programme for auditing the due diligence conducted by banks and professional enablers, to ensure that they fully complied with anti-money laundering legislation and polices.

Increased sharing of data within banks and professional enablers, and between banks, professional enablers and the state, so that there is greater visibility on the risk profile of customers and transactions.

Creating additional penalties at organisational and individual levels for banks and professional enablers who fail to self-police and act in accordance with anti-money laundering legislation and procedures.

Joining the Extractive Industries Transparency Initiative (EITI) to ensure greater transparency and accountability on the operation of the extractive industries – historically an area at higher risk of corruption.

Increased transparency on the BEE (black economic empowerment) programme to ensure that the legitimate aims of the initiative are not subverted for personal or criminal gain.

Proper utilisation of anti-money laundering and corruption legislation, as well as implementing additional laws to hold public officials to account and assist with recovery of assets – coupled with increased funding for regulators.

Full implementation of the Financial Action Task Force (FATF) recommendations.

Increased mutual legal assistance between states.

Strengthening of extradition agreements between states.

“In order to foster relations between state law enforcement and the financial sector, it is recommended that South Africa establishes a body replicating the UK’s Joint Money Laundering Intelligence

Taskforce [JMLIT] within the next 12 months,” said Hain.

“Since its inception, the JMLIT has supported and developed over 500 law enforcement investigations and has directly contributed to 130 arrests and the seizure or restraint of over £46 million (about R880 million).

“As is the case for JMLIT, this body should comprise both local and international banks – in recognition that corruption and money laundering can involve the global movement of funds around banking institutions,” Hain said.

“It is further recommended that international banks should be required to share with the South African authorities copies of their monthly or weekly reports to management relating to their assessment of money-laundering, sanctions and corruption risks within the bank and the effectiveness of the banks’ compliance programme.”

–