Culture of complicity: how fincrime thrives in SA

South Africa has tightened Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations since the Financial Action Task Force (FATF) greylisting in 2023, but financial crime (fincrime) remains prevalent. While some money laundering slips through the net in every region, some of the cases we see in SA point to ongoing systemic weaknesses and societal tolerance of fincrime.

A Case Study: Nicole Johnson’s R5 million apartment purchase

A case in point is Nicole Johnson, an alleged criminal facing around 100 charges with links to gang activity, who bypassed AML/KYC red tape to buy a R5 million luxury apartment in Sea Point from her prison cell. This is a feat that required her and her agents to evade the scrutiny of multiple institutions, including real estate agents, legal practices, banks, mortgage lenders, and law enforcement.

In usual circumstances, a property buyer would need to show the source of their funds before the transaction could be concluded. But in Johnson’s case, several intermediaries and developers who were allegedly aware of her criminality seemingly helped her to disguise her finances through a range of her construction businesses.

Exploiting the FIC loophole

Estate agents and developers are legally obliged by SA’s Financial Intelligence Centre Act (FICA) to run full AML/KYC compliance checks. However, in this case, Johnson’s developers were not deemed to be ‘performing actions’ of estate agents and were not forced to register with the FIC. This created a loophole for the transaction to be settled without the usual checks.

The case that should be deeply concerning to South African financial institutions, regulators, and policymakers at a time when we are so close to possibly being removed from the greylist. It suggests that, in addition to the technical work that regulators have already carried out, we need to see a shift in the compliance and enforcement culture to address fincrime risk.

Reactive approaches are failing

This is yet another case study in how SA’s reactive approach means we are learning too late from our failures, allowing criminals to get away with their actions and failing to prevent breaches. Beyond the fact that Johnson’s partners could choose not to register with the FIC, the case shows that there are many people in the ecosystem willing to launder money for alleged criminals.

Johnson was a simple Google search away from being identified as a potentially dangerous person. It would simply not be possible for her to have made a cash purchase of a luxury apartment without help from others willing to bend the rules for her. Of course, this behaviour is further enabled by the fact that the state has so far proven ineffectual in prosecuting fincrime, a weakness FATF has highlighted.

Building a culture of accountability

To correct this situation, institutions such as banks, legal practices, and estate agents must be ready to ask uncomfortable questions. They should know who’s breaking the rules and understand how best to detect and prove their wrongdoing, so such threats get stamped out immediately. Intelligence and data are more powerful than bureaucracy and need to be more accessible at every societal level.

Prosecution is ultimately the state’s responsibility, and financial institutions cannot stand in for law enforcement. But with so many institutions detecting and reporting crime, accountability often gets blurred. These disputes over AML responsibility make enforcement harder. Every part of the system needs to work together and communicate clearly to fight financial crime effectively.

Why technology matters now

Criminal networks, terrorist financers, and traffickers span the globe, and it is difficult for institutions to keep up. Anti-financial crime technology can help close the gap. Other regions are already using advanced data sharing, automated risk analysis, and media checks. South Africa, following its FATF greylisting, should do the same, driven by secure digital tools.

Reliable data and accurate technology make it easier to uncover criminal networks and support prosecution. Understanding data privacy across all institutions is just as important as partnering with RegTech providers to build open collaboration among lawmakers, prosecutors, regulators, and financial institutions.

With smarter, proactive AML standards applied across industries, technology enables seamless coordination, from risk assessment and red-flag detection to due diligence and Suspicious Activity Reports. The goal is a shared system that protects legitimate customers while catching bad actors.

In the latest episode of RelyComply’s Laundered podcast, they delve into the Nicole Johnson case, its legislative and societal holes, and the fallout, calling for more than just regulatory focus in South Africa’s AML compliance culture. 

* Elliott is the CEO of Anti-Money Laundering (AML) platform RelyComply.

** The views expressed herein are not necessarily those of Personal Finance or Independent Newspapers.

PERSONAL FINANCE