How to avoid Gupta-like money laundering schemes, according to Britain's Lord Peter Hain

18 November 2019 - 14:26 By ZINGISA MVUMVU
Lord Peter Hain, who testifies at the state capture inquiry on Monday, said introducing legislation similar to that of the UK would help stop other business people who may be engaged in money-laundering while the attention is fixated on the Guptas.
Lord Peter Hain, who testifies at the state capture inquiry on Monday, said introducing legislation similar to that of the UK would help stop other business people who may be engaged in money-laundering while the attention is fixated on the Guptas.
Image: Thapelo Morebudi/The Sunday Times

South Africa should adopt from the UK's laws against money-laundering to prevent state capture and illegal money movements - such as those allegedly done by the Gupta family.

This was the advice given by Lord Peter Hain during his testimony to the inquiry into state capture on Monday.

According to Hain, only strict legislation would root out money laundering, which was allowed to flourish under former president Jacob Zuma.

Information-sharing between institutions, such as banks, were among some suggestions he believes could nip money laundering in the bud.

"There is the question of implementing legislation to allow voluntary sharing of data between banks where there is a suspicion of money laundering.


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"We then need to establish another body which replicates another UK institution, the joint money-laundering intelligence task force. And that should be done in South Africa within the next 12 months if the commission so recommends.

"Its focus is to share public-private information regarding money laundering and other economic threats and it allows banks to work with law enforcement to detect money laundering threats by sharing the confidential information that banking institutions have with each other and with the regulators," said Hain.

Hain said introducing legislation similar to that of the UK would help stop other business people who may be engaged in money laundering while the attention is fixated on the Guptas.

In his view, the Guptas were just the tip of the iceberg in a much bigger problem of illegal money movements across different jurisdictions.

Hain further recommended that the Reserve Bank, which audits the financial affairs of commercial banks, should do so more often.

He said: "These audits should take place without notice and a random sample of due diligence files in those entities should be reviewed. That is not the case at the moment because it would make it difficult for banks to hide their failures. 

"There should be a root causes analysis and the overall score should be made publicly available. In this way, the public, business and government can be helped in reaching decisions and ensure banks live up to their ethical standards and deserve increased business."

Hain's testimony also shone a light in how banks, auditing firms and different governments and states enable state capture and money laundering. 

He called for close co-operation between countries to detect suspicious money movements and act immediately without delay.


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