Tag regulatory affairs

Rahn Consolidated (Pty) Ltd’s (“Rahn Consolidated”) articles and case studies are aimed at socialising, climatising, creating awareness and cautioning economic participants on regarding economic crime schemes. The focus will inter alia be on the investigations around Postbank susceptible to Money Laundering, risks, reporting and most importantly, its regulatory compliance. The term “Economic crime schemes” are often used interchangeably with “Financial Crime”. For the purpose of ensuring all readers are kept in the loop, Rahn Consolidated will make use of both terms. Rahn Consolidated being at the forefront of deterring Financial Crime through compliance will focus primarily on the compliance of regarding Financial Crime and ensuring fines by way of administrative sanctions that fines are mitigated as much as possible.

Issue No.17 focuses on schedule 1, item 14 of the Financial Intelligence Centre Act (FIC Act). Which names the Postbank as an accountable Institution.

The purpose of this article is to highlight whether there are areas where the Postbank is susceptible to money laundering. We also would like to highlight areas in which Rahn Consolidated can assist to embed controls in this regard. By definition, a Postbank undertakes activities which are customary for a financial institution carrying on the business of accepting deposits. This therefore implies that with the inflow and outflow of mainly cash. We can already see that there are pertinent requirements in the FIC Act that need to be adhered to.

This article also aims to highlight the risks associated to not embedding any controls to curb money laundering activities.

Enjoy the Read!

Item 14 of Schedule 1 of the Financial Intelligence Centre (FIC) Act identifies the Postbank as an Accountable Institution (AI). As referred to in section 51 of the Postal Services Act, 1998 (Act 124 of 1998). Prior to indicating all Money Laundering risks that may be associated with the Postbank. It is imperative to highlight activities performed by the Postbank in order to arrive at an analysis.

Postbank activities include but are not limited to:

Based on above activities, we will focus on money remitters and deposits as activities offered by Postbank. Below are money laundering risks which need implementation of controls on

Money Remittances: risks associated with money laundering:

• Money remittances being cash intensive have high risks owing to large values being remitted to high-risk jurisdictions.
• Postbank in this regard, particularly relating to the money remitting activity. It has to ensure that they embed transaction monitoring controls relating to reporting.
• Thus far there have been about 81 964 reports associated Suspicious Transaction and Activity Reports.

Acceptance of deposits and transfers

• Postbank act as a deposit-taking entity without a banking license under a Banking Act exemption.
• Postbank engage in deposit-taking activities under an exemption from being licensed as a bank. Thus they are not supervised for AML/CFT by the SARB:PA, but by the FIC.
• The risks in deposit taking relate to taking cash or any form of money from individuals. It is unable to conduct customer due diligence on.
• Initial findings identified in the Mutual Evaluation Report in the Financial Action Task Force (FATF). Indicate that 34% of cash deposits are done by unknown depositors.
• Rahn consolidated can assist in embedding controls in monitoring cash transactions and reporting accordingly.

ML/TPF Risks Notes: Registration of Postbank as AI

Postbank operating as a Financial Institution would require a registered section 43B compliance officer. And a registered MLRO in its respective branches for purposes of registration.

Ref: PCC05B

In the murky world of financial crime, human trafficking, people smuggling and modern slavery surely stand out as the most callous and despicable acts perpetrated by organised crime syndicates. From the mass drownings that occur across the Mediterranean and English channel on an almost daily basis to the many child trafficking rings exposed across the world, the depravity of human trafficking never ceases to shock and amaze us.

This article looks at the sobering state of human trafficking in Africa while outlining the case for how financial crime and anti-money laundering experts act as a crucial intermediary in stopping human trafficking ‘in its tracks’.

A Financial Crime worsened by the COVID-19 Pandemic

Human trafficking remains a terrifying issue that does not escape colour, class or creed, and has unfortunately been further exacerbated by the COVID pandemic, as Governments and expert agencies focus on the economic and vaccination response. As the criminal syndicates who fuel this illicit trade increasingly adopt the dark web to conduct their activities, financial crime and compliance officers now play a critical role, alongside law enforcement, in identifying suspicious transactions and flagging individuals who may be complicit in human trafficking. 

The Extent of Human Trafficking in Africa

On the same day that the Ghislaine Maxwell sex-trafficking trial in connection with Jeffrey Epstein, is set to begin in New York, African statistics paint a grim picture of its proliferation across the continent. According to the Traffik Analysis Hub in the UK, and the African Institute for Security Studies, it is estimated that each and every year, an additional 3.5 million African citizens are being trafficked, while close to nine million Africans are currently being enslaved. Almost every African state is identified as either a source, transit, or destination country for victims, making this a significant issue for all nations to address.

The Role of the Public and Private Sector in Fighting Back

The global crime syndicates involved in human trafficking, operate through a veiled cloak of online secrecy that is almost impossible to intercept. However, the one area of opportunity to disrupt and dismantle these syndicates is through the monitoring of the financial transactions of suspected individuals. Compliance and financial crime professionals can assist in identifying, flagging and reporting suspicious activities through the following methods;

• Identify red flags and report suspect financial activities before they are processed and cleared. 
• Financial companies to empower regulatory and compliance teams with the relevant resources to take reporting action on each individual suspicious activity
• Enhanced Sanctions screenings process while onboarding new customers. 
• Leverage the latest technologies and localised platforms to help identify risks and raise red flags

RAHN Financial Crime – Turning the Tide against Human Trafficking

The transaction monitoring capabilities of the Rahn Financial Crime Platform enables organisations to identify specific types of transactions which can be associated with Human Trafficking. This is done by monitoring transactions to identify suspicious activity known to resemble transactions that are concluded by traffickers. An example of such would be transactions where large deposits are immediately withdrawn, close to international borders. In this case, the location of the branch where the transaction was executed, the size of the withdrawal (including aggregation) and the timing of the transaction will all be considered to identify potentially suspicious activity.

RAHN Consolidated Pty Ltd. is a proudly South African company, committed to equipping financial professionals with real-time resources to take the fight against human trafficking rings and other organised crime syndicates. Contact us today to explore how we can empower your business with a financial attack strategy to help put an end to human trafficking.

Sanctions screening is a process undertaken by financial institutions, with the help of specialised software, to help them identify and detect any potential financial crimes, either while onboarding a new client, or screening an existing customer. It plays a crucial role in trying to prevent money laundering, while also forming part of the Customer Due diligence process for the banking industry, insurance companies and FinTechs who act as registered credit providers.

Keeping your ‘Eyes on the List’ in Testing Times

One would safely assume that Sanctions screening plays an everyday role in the compliance and regulatory procedures of institutions that manage the transactions of prominent, influential and politically-connected people. However, as recently outlined in our financial crime compliance case study, anti-money laundering control measures are coming under closer scrutiny by the South African Reserve Bank. Companies that fail to meet the high standards required, run the risk of severe financial penalties for any oversight. While the pandemic, and the resultant economic crisis, has forced many institutions into major financial cutbacks and retrenchments – the result has been a severe erosion in the quality of compliance and regulatory affairs of major players in the financial system.

Sanctions Screening  – Compounded by the Crypto-Explosion

Perhaps the biggest differentiator between cash transactions and cryptocurrency has, up until now, been the wide gap in the sanctions compliance requirements between fiscal and digital assets. With more and more people now joining the “crypto-revolution”, and an increasing number of rogue actors (and even Governments) using ‘crypto’ to either hide or move, their criminal transactions, something has got to give, very soon.

Crypto-Risk is set to become a significant part of sanctions screening in the next decade. It remains to be seen how compliance will evolve. What we do know, however, is that cryptocurrencies are here to stay and will require the same standard of financial crime compliance as the brick and mortar institutions around the world. Watch this space!

Introducing RAHN Monitor

If your company is still looking for a localised solution to meet the strict SARB requirements for financial crime compliance, your search ends here. RAHN monitor is a real-time software application that monitors identifies, mitigates and analyzes your sanction screening outcome data. The software team at RAHN have simplified the approach to sanctions screening with a proudly South African solution that; enhances data quality, stops money laundering, and always ensures company compliance.

RAHN monitor consists of three main components, which include 

– a sanctions dataset that is updated to daily synchronize with the majority of the sanctions listing. 

– a search function.

– the ability to develop custom internal datasets. 

The search function allows users to search for specific individuals via the user interface, while compliance officers and managers who need to confirm a sanctions-hit can use the app before making an onboarding or instant decision. You can manage your account, buy more searches, clear your local database, by a license for the application, or view search history

RAHN Consolidated – Sanctions Screening, Simplified

At Rahn, we believe that financial crime compliance software should be accessible and affordable to all financial institutions struggling to keep up in this fast-paced, ever-changing landscape. Discover how we can help your business analyse, detect and mitigate against sanctioned individuals, or avail of a host of specialised consulting and recruitment services which can take your business forward. Contact our Team today to explore your options, or request a demo.