US embassy cable - 05PRETORIA1789

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