Johannesburg – South Africa falls short of measures to curb corrupt financial flows, according to a Transparency International (TI) report.
Executive director of Corruption Watch David Lewis on Sunday said the TI report highlighted how G20 countries, including South Africa, had failed to honour their undertaking to fight corruption.
The report was released to coincide with the recent G20 meeting in Turkey.
Lewis said this included enacting legislation to require the disclosure of the beneficial owners of companies and trusts.
“As much as $2 trillion is laundered each year, much of it by hiding company ownership behind opaque structures, and yet hardly any of the G20 member states are doing enough to curb the ease with which cash can be hidden, or illicit financial transactions are conducted.”
According to the report which reviews progress against the Beneficial Ownership Transparency Principles adopted by the G20 in November 2014, only the United Kingdom is actively working to curb these unlawful financial flows, scoring the highest of all member states in relation to the 10 principles.
The majority of G20 countries’ frameworks are rated as average, including Germany, India, Mexico, Japan, Turkey and Russia, he said.
A small group of countries, among them some of the world’s biggest economies, falls into the category of ‘Weak Framework’, namely the United States, Australia, Canada, China, Brazil and South Korea.
Lewis added: “South Africa, as the home of the largest and most sophisticated financial centre on the African continent, should take the lead in promoting the disclosure of beneficial ownership.”
Lewis also said the TI report singled out Brazil and South Africa as the two countries that have fallen behind on the most basic aspects of ensuring who the real owners of companies are.
“Neither South Africa nor Brazil have even legislated as accurate and comprehensive definition of beneficial ownership, the technical term used to describe the real person or persons who ultimately benefit from the ownership of a company.”
While the South African Parliament has tabled amendments to laws which would help to close existing loopholes, the current success rate in tracking down the movement of cash across borders is severely hampered by shortcomings in company ownership disclosure requirements, said Lewis.
Lewis said it’s encouraging that the disclosure of beneficial ownership has been incorporated into the proposed amendments to the Financial Intelligence Centre Act.
“However, in the first instance, our demand is that all companies bidding for public contracts should be required to disclose who their beneficial owners are,” he said.