SA Banks Complicit in Enabling Organised Crime

Dr. Reneva Fourie

As the Madlanga Commission hearings press further into the grave allegations that criminal syndicates and drug cartels have penetrated South Africa’s law-enforcement agencies, it is impossible to ignore that none of this could have flourished without the unimpeded movement of vast illicit funds. The flow of money is the bloodstream that sustains organised crime. 

South Africa’s placement on the Financial Action Task Force grey list in 2023 for weaknesses in anti-money-laundering and counter-terrorist-financing frameworks now appears to have been more than a bureaucratic inconvenience. It was a warning that all was not well across the financial sector, particularly the commercial banks.

Yet it was largely dismissed as a procedural hurdle for an otherwise sophisticated and highly regarded system. The irony is that this very sophistication —the speed and reach that underpin the efficiency of South Africa’s banking infrastructure —appears to have been exploited to power illicit activity on a scale that now threatens the integrity of the state.

The hearings have already begun to reveal the extent of that threat. Among the networks named is the so-called Big 5 cartel, which is linked to running a vast illicit economy spanning narcotics, vehicle theft, and extortion. Evidence before the commission suggests that this cartel’s reach extended into senior ranks of law enforcement.

Such a sprawling syndicate could not have operated without discreet financial channels to move and disguise its earnings. Its very endurance points to serious failings in the banks that processed these transactions and in the regulators that should have stopped them.

Criminal syndicates, such as the Big 5, do not move their profits in plain sight. Cash on this scale does not only travel in suitcases. It moves invisibly through wire transfers, layered accounts, shell companies, and trade-based laundering schemes, often disguised as legitimate commerce. That such flows were not detected or were overlooked speaks to either gross negligence or deliberate complicity within the financial sector.

In 2023, Al Jazeera conducted an investigation that revealed how easily these vulnerabilities could be exploited. Senior officials at Standard Bank, ABSA, and Sasfin were accused of acting as paid facilitators for a gold-smuggling network linked to Simon Rudland, a cigarette magnate. These insiders reportedly engineered dubious money transfers, disabled internal red-flag mechanisms, and even erased evidence from computer systems in exchange for bribes. Such actions strike at the heart of banking integrity.

The South African Reserve Bank and its Prudential Authority have in the past imposed administrative sanctions on major banks for inadequate anti-money-laundering controls and weak compliance with the Financial Intelligence Centre Act.

These penalties, often treated as routine housekeeping, reveal the extent of systemic fragility. The technical breaches signalled the existence of gaps wide enough for criminal syndicates, including cartels such as the Big 5, to drive through billions of illicit funds.

This unevenness in enforcement exposes a troubling dynamic. Ordinary citizens, small businesses, and low-level clients are subjected to stringent scrutiny, burdened by paperwork and compliance protocols for even the most modest transactions.

Meanwhile, substantial sums linked to cartels have moved through elite financial channels with little resistance or intervention. The disparity raises an uncomfortable question: Is the architecture of financial oversight skewed in favour of those with power, influence, and deep resources?

Large banks wield significant influence and possess extensive legal and financial resources. They can shape regulatory discourse, resist reforms, or delay implementation under the guise of protecting market stability. Regulators, wary of damaging the credibility of a sector vital to economic health, sometimes retreat from decisive action. This interplay fosters a culture of selective vigilance, where compliance is enforced rigorously at the periphery yet often falters at the core.

Equally damaging is the fragmented nature of enforcement. The Financial Intelligence Centre, the Reserve Bank, the Prudential Authority, the National Prosecuting Authority, and law enforcement agencies often work in isolation. Information is not always shared promptly or acted upon collectively. The FIC may flag suspicious flows but lacks the power to freeze transactions in real time.

The Reserve Bank can sanction procedural lapses, yet it hesitates to act without incontrovertible proof of direct criminal facilitation. Banks themselves distribute accountability across compliance, audit, and risk departments, making it harder to assign personal responsibility. These structural weaknesses allow illicit finance to thrive in the gaps between institutions.

The Madlanga Commission offers an opportunity to pierce this veil. It must summon the relevant banks to testify under oath, compel the production of transactional records, compliance logs, and internal communications, and press the Financial Intelligence Centre to account for how its filters and alerts failed to intercept such large-scale flows. The Reserve Bank must disclose where its inspections fell short, why enforcement was sporadic, and whether its deference to certain institutions undermined deterrence.

The stakes for South Africa are immense. A financial sector that allows its sophisticated systems to be hijacked by criminal syndicates corrodes the foundations of governance. It deepens inequality by punishing the compliant and rewarding the corrupt.

It erodes investor confidence, disincentivises lawful enterprise, and strengthens networks that buy influence in politics and law enforcement. Once illicit flows poison the bloodstream of the economy, the vulnerability of the rule of law increases.

To restore integrity, the commission must advocate for more than piecemeal reform. South Africa requires a unified enforcement architecture that integrates intelligence, real-time forensic capacity, and meaningful sanctions that go beyond administrative fines to impose genuine corporate and individual liability.

Where appropriate, banks must face the prospect of punitive measures proportionate to the harm they have enabled. Regulators must be empowered and compelled to act decisively, free from political and corporate influence.

The Madlanga Commission inquiries must include banks and their regulatory bodies. Without financial enablers, there would be no seamless laundering of drug profits, no discreet transfers of cartel funds, and no purchase of immunity from the law. The exposure of the Big 5 cartel underscores that the battle against organised crime is inseparable from the battle to cleanse the financial sector. These institutions must be compelled to account.

* Dr Reneva Fourie is a policy analyst specialising in governance, development, and security.

** The views expressed do not necessarily reflect the views of IOL, Independent Media or The African.