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Cablegate: South Africa: Financial Intelligence Centre Update

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 PRETORIA 001789

SIPDIS

SENSITIVE

EB/ESC/TFS, S/CT, INL/C, IO/PHO, TREASURY OFAC, AF/S
(KGAITHER), INL (EMCKAY), INL (EROESS)

E.O. 12958: N/A
TAGS: EFIN ETTC PTER PREL KTFN KVPR SF
SUBJECT: SOUTH AFRICA: FINANCIAL INTELLIGENCE CENTRE UPDATE

REF: 2004 PRETORIA 04865

(U) This cable is Sensitive But Unclassified. Not for
Internet distribution.

1. (U) Summary. South Africa's Financial Intelligence Centre
(FIC) continues to evolve as an institution. The FIC seeks
better cooperation with law enforcement, higher quality
suspicious transaction reports (STRs), continued focus on
training, and international status as a Financial
Intelligence Unit (FIU). As part of its international
efforts, South Africa plans to host the February 2006
Financial Action Task Force (FATF) Plenary session in Cape
Town and plans to sign a Memorandum of Understanding (MOU)
with the U.S. Financial Crimes Enforcement Network (FinCEN)
in June/July 2005. End Summary.

FIC Progress Updates Received
------------------------------

2. (U) South Africa's Financial Intelligence Centre (FIC)
Senior Manager of Monitoring and Analysis, Ursula M'Crystal,
led a January 24th session at the United States Secret
Service Financial Crimes workshop (financed by International
Narcotics and Law Enforcement Affairs). The Pretoria-based
workshop addressed 70 law enforcement members, including the
South African Police Service (SAPS) and the Scorpions, a
special investigative unit that operates independent of SAPS.
During this workshop and in recent conversations with
Econoff, M,Crystal provided updates on the FIC's progress
since its first full-year review (reftel).

Feedback Needed From Law Enforcement
------------------------------------

3. (U) M'Crystal stated at the workshop that the FIC should
be considered a "tool for law enforcement." Feedback from
law enforcement was needed in order to better track the
progress of cases (i.e., number of successful prosecutions).
Typical money laundering cases require about two years of
investigation and two years for prosecution. M'Crystal said
that the FIC tries to avoid duplicating resources between
SAPS and Scorpions during investigations.

4. (U) M'Crystal emphasized that the FIC does not have
investigative powers and will not make files public. She
said that law enforcement can request information from the
FIC, but the FIC or an STR reporter cannot be compelled to
testify in court. However, M,Crystal later said that the
FIC may have to testify later this year.

Focus On STR Quality and Training Continues
-------------------------------------------

5. (U) Currently, 95% of suspicious transactions reports
(STRs) are received electronically. The FIC continues to try
to improve the quality of the STRs it receives. In order to
improve quality, banking officials, law enforcement, and
others who submit STRs should be better trained on what
constitutes an STR. M'Crystal stated that STRs should be
supported by appropriate evidence or pattern, and not based
solely on a hunch or a person's dress. She also said that
many STRs are often related, noting that one case involved
100 STRs. All reporting institutions must report an STR
within 15 days. If it does not do so, penalties include 15
years in prison or a R 10 million fine ($1.7 million). To
date, these penalties have not been used.

6. (U) Each financial institution has an Authorized Officer
who can submit and request information to/from the FIC. This
officer is appointed by the institution and must be
accredited by training. The FIC will train and retrain these
officers as necessary. In regards to FIC staff, the FIC has
trained 71 financial investigators and has approached the
University of South Africa (UNISA) to start an accredited
program for financial investigators.

Institution Building Continues As Well
--------------------------------------

7. (U) As part of its internal growth progress, the FIC
foresees the appointment of a Deputy Director later in 2005.
By June 2005, the FIC plans to open a regional office in Cape
Town. The FIC continues to be a member of the Money
Laundering Advisory Council along with law enforcement, the
Banking Council, and insurance industry representatives.
This Council advises the South African government on money
laundering issues.

8. (SBU) On the international front, South Africa plans to
host the Financial Action Task Force (FATF) Plenary session
next February in Cape Town. The FIC is in the process of
signing Memorandums of Understanding (MOUs) with law
enforcement (e.g., SAPS) and international organizations
(e.g., Interpol). The U.S. Financial Crimes Enforcement
Network (FinCEN) and the FIC plan to sign an MOU in late
June/July during the Egmont Group meetings in Washington.
The MOU will cover a general sharing of knowledge between the
two FIUs.

Comment
-------

9. (SBU) The FIC continues to make positive strides in its
development as a Financial Intelligence Unit. Training and
the quality of STRs remain a focus area as well as meeting
international standards. The FIC is Africa's leader in
combating financial crimes and is striving to be an
international player through its participation in worldwide
meetings and MOUs. Post will continue to monitor the FIC as
it strives towards its ambitious goals.
FRAZER

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