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The head of South Africa’s revenue service said it will ramp up efforts to target lenders and advisors who may be "professional enablers" of organised corruption and financial crimes to combat illicit capital flows and tax evasion.
"It is unacceptable for a bank to adopt a compliance tick the box mindset, and not understand that they’re dealing with systemic risk issues; that is inexcusable," Edward Kieswetter, commissioner of the South African Revenue Service (SARS) said in an interview in the capital, Pretoria, on Tuesday. "Banks would like to plead plausible deniability. It’s better for them not to know that someone is a crook because crooks are profitable clients."
Measures to hold them accountable include listing suspect lenders and other professional institutions as entities of interest in tax crimes that are being probed, instituting charges against them, conducting detailed investigations and audits and freezing assets to secure a flight risk of capital, Kieswetter said.
"We will not stand by" and "inadvertently become an enabler of corruption," he said.
The tax authority in December instituted legal proceedings against lender and financial services group, Sasfin Holdings Ltd. for R4.78-billion ($254 million) in relation to allegations of money laundering and bribery by its former employees and clients.
The civil claim followed the news organisation Al Jazeera’s reports that Sasfin Bank staff and others from South Africa’s Standard Bank Group Ltd. and Absa Group Ltd. were involved in laundering money in exchange for bribes from an international gold smuggling syndicate with strong ties to Zimbabwe.
Sasfin has rejected SARS's claim, while Standard Bank in an emailed response said it fired the employee allegedly involved in the money laundering scheme, adding that "no Standard Bank systems, processes or other assets were used in respect to the alleged gold smuggling and money laundering scheme."
Absa did not respond to an email seeking comment.
The revenue service is also looking at banks and other advisors in its efforts to tackle the illicit tobacco trade that’s flourished since a temporary ban on the use of the product during the height of the coronavirus pandemic, the commissioner said in a press briefing announcing tax collections for the year through March 31.
Over the period the tax agency executed 147 preliminary probes and collapsed an illicit tobacco and gold financial flow scheme.
The steps add to others taken by Kieswetter and his team to rebuild the agency popularly known as SARS after it was hollowed-out during former President Jacob Zuma’s scandal-marred rule. They include setting up units to deal with syndicated crime and handle the tax affairs of large businesses and high-net worth individuals.
President Cyril Ramaphosa appointed Kieswetter to head the tax agency in May 2019 and renewed his contract for two years in February.
Kieswetter said his reappointment was done to ensure continuity at the institution as the country heads into elections on May 29 that may be unprecedented, "if all the predictions are correct."
