South Africa's Financial Intelligence Centre (FIC) is the only government entity authorised to receive information on transactions and regulatory reports regarding suspicious and unusual transactions.
Accountable financial and non-financial institutions listed in Schedule 1 of the FIC Act are seen as potential targets of criminals looking to launder money or finance terrorism. Therefore, such institutions’ registration with and provision of regulatory reports to the FIC are central to identifying, disrupting and deterring money laundering and terrorism financing.
Regulatory reports
The FIC interprets and analyses the reports to develop financial intelligence which is used by law enforcement, prosecutors and other authorities in their investigations and applications for asset forfeiture. The FIC does not conduct investigations.
As financial crime is seldom hampered by geographic borders, the centre has in place information exchange agreements with its counterparts and role players globally.
The connection between institutions’ regulatory reporting, the usefulness of transnational collaboration and the FIC’s analysis in following money in the pursuit of financial crime were well illustrated in the recent Sunday Times article “Steyn City 'tech entrepreneur' jailed for fraud".
In the Egenamba matter, the FIC was made aware of a BEC investigation by the US Federal Bureau of Investigation (FBI). It involved two fraudulent Swift payments from a JP Morgan Chase bank account held by a US entity to a South African entity, Barlon d’Or Group, owned by the Nigerian
It described the fraudulent exploits of Nigerian techpreneur Martins Egenamba, 37, who was jailed for 15 years by the Palm Ridge magistrate's court on June 2 for his role in an international business e-mail compromise (BEC) scheme.
How business e-mail compromise works
Criminals use BEC fraud to divert funds from legitimate transactions. They alter bank details on invoices so when targeted government departments and entities, non-profit organisations or businesses pay for services rendered, the payments go to their accounts.
In the Egenamba matter, the FIC was made aware of a BEC investigation by the US Federal Bureau of Investigation (FBI). It involved two fraudulent Swift payments from a JPMorgan Chase bank account held by a US entity to a South African entity, Barlon d’Or Group, owned by the Nigerian.
A person based in the US was purchasing a property there when they received what was subsequently ascertained to be a spoof e-mail from someone posing as his lawyer for the transaction. The buyer was instructed to deposit $675,350.89 (about R12m) into an account provided in the e-mail. All the funds were withdrawn in cash and cashier’s cheques, and $540,000 was traced to a JPMorgan Chase bank account in the name of a US-registered entity.
Link to South African banking system
From the JPMorgan Chase bank account, $445,000 was transferred in two transactions to an account held at FNB, a division of FirstRand Bank Limited, to the benefit of Barlon d’Or.
The FBI alerted the FIC and requested assistance in its investigation. The FIC set in motion various tracking and tracing processes on the bank account in South Africa. One involved the centre issuing an instruction to the bank, under section 34 of the FIC Act, not to proceed with transactions on the account for 10 days. Section 34 instructions allow time for further inquiries on identified bank accounts and for the FIC to alert the Asset Forfeiture Unit (AFU), the national director of public prosecutions (NDPP) and/or the Special Investigating Unit (SIU). After the section 34 instruction to FNB, the FIC secured more than R6.1m in the account and the AFU obtained a forfeiture order on the amount secured.
The seamless, cross-border execution of crime by the would-be techpreneur was brought to a just end when it was matched by equally seamless intercontinental and domestic collaboration among law-enforcement and criminal-justice partners. Joint efforts such as these showcase the transnational nature of the FIC's work and its reach in the pursuit of financial crime.
* Khanyile is an advocate and the director of the Financial Intelligence Centre
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