Abstract
Politically Exposed Persons (PEPs) are at an increased risk of money laundering and corruption because they can utilise their connections to influence how government funds are allocated to them. In recent years South Africa has experienced several high-profile cases of corporate governance failure and financial scandal, specifically those involving individuals who were closely associated with politicians or government officials. This has raised concerns regarding whether current regulatory frameworks provide adequate oversight and compliance mechanisms for the banking sector.
This dissertation will examine how South African banks regulate PEPs and what is being done to enhance the due diligence required by accountable institutions when dealing with PEPs, as defined by the Financial Intelligence Centre Act 38 of 2001 (as amended) and related regulations. It will further investigate how well the current PEP compliance framework in South Africa functions in comparison to international standards, especially the FATF recommendations.
Using a doctrinal and comparative research methodology, this dissertation will analyse both South Africa's legal and institutional framework for PEP regulation and compare it with the manner in which other jurisdictions approach anti-money laundering (AML) and counter-financing of terrorism (CFT).
The findings from this dissertation are that while South Africa has made great strides in enhancing legislative alignment to international AML/CFT requirements, there are still numerous issues facing the successful implementation and enforcement of the PEP obligations.
Ultimately, the findings suggest that in order to address PEP-related risks in South Africa, there needs to be greater institutional enforcement and better regulatory coordination as well as improved monitoring mechanisms for assessing bank compliance with the applicable laws and regulations so that meaningful protections may be provided for the integrity of the South African banking sector.