Raeesa Haneef - Attorney of the High Court of SA
20 Aug 2021
Illicit financial flows are broadly illegal movements of money from one country to another. These financial activities may consist of, inter alia, revenues from illegal activities, tax avoidance, abusive profit-shifting, trade mis-invoicing, human and drug trafficking, corruption.
Various initiatives have been undertaken at a global level to combat this phenomenon. Most recently, the Internal Revenue Service Criminal Investigation Division (IRS-CI) of the USA and the South African Revenue Service (SARS) of South Africa (SA) enforcement divisions are joining forces to fight tax and economic crimes affecting both countries.
According to the Press Release on 6 July 2021, the IRS-CI and the SARS are working together to identify, investigate and bring to justice criminals with a nexus to both countries who have committed, among other crimes, international public corruption, cyber fraud, and money laundering. The newly formed partnership has already uncovered emerging schemes perpetrated by promoters, professional enablers, and financial institutions.
To date, SA and the USA have established a sound trading relationship with 12% of exports from SA being made to the USA. Furthermore, South Africa Foreign Direct Investment (FDI) increased by 410.3 USD million in Mar 2021, compared with an increase of 1.0 USD billion in the previous quarter.
SARS is currently putting in mechanisms to make it easy for taxpayers to comply with their tax obligations and hard and costly for those who willfully do not comply. Compliance with Know-Your-Client (KYC) procedures is an example of how institutions can easily prevent instances of money laundering and fraud.
The SARS is currently addressing non-compliance by using data exchange and analysis with a focus on the monitoring of high wealth South African individuals with offshore financial assets. It is our view that these processes, along with the exchange control rules and regulations administered by the South African Reserve Bank (SARB), will prove effective and useful.
The widely held view is that the battle against financial crimes cannot be fought alone by any one country and that taxpayers and tax professionals using offshore and other sophisticated schemes to evade the USA and South African laws will be uncovered and prosecuted to the full extent of the law.
SNG Grant Thornton can help protect and assist you in navigating any risk areas related to your financial wealth or assets, through the use of our specialist tax data analytics tools and key tax personnel.
