SA’S IS CRISIS | Why it’s so hard to track money going from SA to IS

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SA’s financial sector is an attractive prospect for international terrorist organisations because it is well connected globally, easy to use and has a large, economically active émigré population, the members of which have strong ties to their home countries.

Detecting and infiltrating those supporting these groups through irregular money movements is a major challenge for the government.

This is according to the Financial Intelligence Centre’s (FIC) legal and policy division executive manager Pieter Smit, who spoke to TimesLIVE about its February assessment report on terror financing in SA.

For months the FIC has been engaging the private sector to educate businesses on how to identify whether they are being used to fund organised crime and terror networks.

“From our point of view the threat of SA and its systems being used to finance crime and terrorism certainly exists. The assessment was to look at vulnerabilities and how these can be sufficiently addressed.

“It was to point out to the private sector, mainly financial institutions, what they should be on the lookout for should it happen that their businesses are used for terror financing and to help them be in a better position to deal with it.”

He said looking at all the factors referred to in the report, as well as understanding SA’s position on the continent and its links to East Africa, it is easy to work out that there is a potential for terrorism financing.

“From the funding flows to East Africa and within that [finance] corridor, there will be a likelihood that some of the funding would be for groups like al-Shabab or Al-Qaeda from their sympathisers.”

There are people in SA sympathetic to the IS cause who attempted to and actually left to travel to Syria to join the group and become part of its caliphate.

—  Pieter Smit, Financial Intelligence Centre

He said there were people in SA who were sympathetic to the Islamic State (IS).

“It is not even a possibility. It happens in practice. There are people in SA ... who attempted to and actually left to travel to Syria to join the group and become part of its caliphate.

“Recently, the US authorities listed four people who were SA citizens and residents, and sanctioned them for their links to raising funds for IS.”

While he stressed that not all funds flowing from SA, largely via the country’s informal sector, were linked to terrorism, or that such funding was prevalent or at an extreme level, “that it happens is concerning enough and deserves our attention”.

Smit said a big challenge in addressing such financing was that few people outside those in law-enforcement and intelligence circles were aware of the crime.

“In the private sector, among banking institutions and money remitters, there is very little awareness and understanding of how they can become involved in fundraising or be used as a conduit for finances flowing out of the country.

“The challenges to combat terrorism and organised crime financing are immense. Key to addressing them is understanding SA’s position in the value chain of terrorism financing, where the country is a fundraising source and a conduit for funds raised elsewhere and being sent to the Middle East and East and West Africa.

“Detecting terrorism financing is difficult. It requires having intelligence close to the sources used for the funding, which are usually émigré communities or people sympathetic to a group’s cause. To combat terrorism financing you need good intelligence on what is happening within communities, the people who are involved and, importantly, the channels they use.

“It is often very difficult to find the evidence for criminal prosecution.”

SA largely relied on intelligence from neighbouring countries when it came to investigating cases in which the country was used as a conduit for terrorism financing, said Smit.

“That’s because we can often only see one side of the transaction.”

He said a major challenge to investigating terrorism and organised crime financing did not lie with SA’s small, regulated remittance businesses, but with the informal money remittance industry which operated outside SA’s regulatory framework. However, not all money flowing through informal channels was for organised crime and terrorism.

“A lot is from people who send money back to their home countries to support family. However, the informal sector definitely also supports organised crime and terrorism.

“Those operating in this sector, who we believe are only a handful, are well entrenched and operate in specific financial flow corridors, be they to East or West Africa, the Middle East or East Asia.

“They operate in groups based on nationalities, which from an investigative perspective makes it incredibly difficult to infiltrate this sector to determine who is behind the money flows, the funds’ purpose and the volume of money flowing from SA.”