Challenges Associated with the Reliance on Customer due Diligence to Curb Money Laundering in South Africa
Customer due diligence is a means of ensuring that financial institutions know their customers and customers are risk assessed before concluding any transactions with them. Customer due diligence measures include identification and verification of customer identity, keeping records of transactions concluded between a customer and the financial institution, ongoing monitoring of customer account activities, reporting unusual and suspicious transactions and risk assessment programmes. The regulation of anti-money laundering measures is crucial to the economic growth of many countries, including South Africa. However, there have been many challenges in the reliance on customer due diligence measures to combat money laundering in South Africa. The challenges include the failure to meet the identification and verification requirements by some South African citizens such that they are denied access to the formal financial sector and a lack of express provisions to regulate the informal financial sector by the Financial Intelligence Centre Act as amended. Give this background, this article discusses the challenges associated with the implementation and regulation of customer due diligence measures to enhance the combating of money laundering in South Africa.
Keywords - Anti-Money Laundering; Customer Due Diligence Measures; High-Risk Customers; Low-Risk Customers; Financial Institutions