The Financial Intelligence Centre (FIC) has warned that Non Profit Organisations (NPOs) may be a target for opportunistic high profile criminals who want to use them as a vehicle for Money Laundering (ML) and Financing of Terrorism (TF).
At a recent workshop hosted by the Department of Social Development (DSD), Professional Bodies were requested to create awareness amongst NPOs of this growing trend, where criminals are targeting them for the purposes of money laundering and for the financing of terrorism.
NPOs were mainly established to raise funds in order to assist people in dire need of support. In many instances, the NPOs are run by individuals who may not necessarily have the appropriate levels of financial and business acumen required to monitor their endeavours adequately. This has been a major contributing factor to NPOs becoming the target for organised crime.
The FIC was established in 2002 and is responsible for identifying suspicious transactions, notifying the relevant prosecuting authorities and sharing such information with the relevant domestic and international authorities as appropriate. It has 89 global memoranda of agreement (MOAs) in this regard.
The FIC is underpinned by three Acts that serve as pillars to its effective operation: The Financial Intelligence Act, (FICA) The Prevention of Organised Crime Act (POCA) and; The Protection of Constitutional Democracy Against Terrorist and Related Activities Act (POCDATARA).
The FIC has identified three different ways in which terrorism can be funded;
Self-funding, where criminals use their own assets, insurance policies, etc. to fund activities; Crowd-funding, which has been identified as the most likely way in which NPOs could be targeted since it is very difficult to identify; and crypto-currency funding. The very nature in which crypto-currencies are structured represents the risk in itself.
FIC’s Senior Legal and Policy Advisor, Lize van Schoor, urges all professional bodies to educate NPOs to ensure that they do not fall prey to these scams. Professional bodies must assist the FIC and the DSD to set universal objectives and definitions to protect NPOs. Some effort must also be put into understanding and mitigating the risks for NPOs.
Van Schoor noted that while South Africans are generous by nature, they are also greedy and are therefore more likely than not to be caught up in money laundering, terrorist funding and pyramid schemes.
Van Schoor emphasised the need for introducing a monitoring and evaluation process in order to ensure that we bolster our efforts and remain abreast of changes in trends in money laundering and terrorist funding.