Abstract
This dissertation provides a detailed examination of South Africa’s anti-money laundering and counter-financing of terrorism (AML/CFT) framework, with a primary focus on customer due diligence (CDD) as a critical preventive measure. The analysis explicitly addresses the ways in which the Financial Intelligence Centre Act 38 of 2001 (FICA) aligns with the international standards set forth by the Financial Action Task Force (FATF) in its recommendations, emphasising the importance of CDD measures in mitigating the risks associated with financial crime.
The study meticulously evaluates the delicate balance between ensuring financial transparency and adhering to data privacy obligations as mandated by the Protection of Personal Information Act 4 of 2013 (POPIA). Through a comparative analysis that includes South Africa, Kenya and the United Kingdom, the research highlights not only the similarities in the regulatory frameworks of these jurisdictions but also distinct differences in institutional structures, enforcement mechanisms, and overall capacities to combat financial crime.
One of the key findings of this research is that South Africa has established a fairly robust AML/CFT system that is largely consistent with international benchmarks; however, significant challenges remain. These include issues related to the supervision of financial institutions, limitations in institutional capacity, and the complexities surrounding the regulation of informal financial activities that are prevalent in the economy.
Additionally, this study explores the impact of emerging technologies, such as artificial intelligence and digital identity solutions, which present both opportunities for enhancing CDD compliance and risks that need to be carefully managed. The potential benefits of leveraging these technologies could lead to more efficient and effective CDD practices, while also addressing some of the existing challenges.
In conclusion, the research underscores the necessity of adopting a balanced, risk-based, and inclusive approach to AML/CFT strategies going forward. Such an approach should be underpinned by a commitment to digital innovation, strengthened governance structures, and significant policy reform. This becomes even more critical as South Africa moves towards maintaining its financial integrity and promoting greater financial inclusion among its diverse population. The country’s removal from the so-called FATF grey list in October 2025 stands as a testament to the progress made toward achieving these objectives and highlights the ongoing commitment to improving the effectiveness of its AML/CFT framework.