South Africa hopes to be faraway from the Monetary Motion Job Drive’s (FATF) gray record this 12 months by proving it has sufficient controls to fight monetary crimes, forestall illicit transactions and cash laundering.
The nation was grey-listed in 2023 amid issues it was getting used as a hub for illicit financing and cross-border cash flows. Whereas addressing systemic points within the monetary sector is a fancy and multifaceted problem, there may be one comparatively easy repair that might yield vital progress: tightening controls over Sim card registration and utilization.
In right now’s digital age, telephones are now not simply instruments for making calls; they’ve develop into important monetary devices. South Africans use them for banking, cross-border cash transfers and on a regular basis monetary transactions. Recognising this shift, telecoms firms have advanced their enterprise fashions, diversifying into monetary companies and providing loans, insurance coverage and cell cash funds. With the rising convergence of telecoms and monetary techniques, making certain the integrity of Sim card registration is extra crucial than ever.
South Africa’s grey-listing, ensuing from issues round a scarcity of cash laundering controls, has already had vital repercussions. The elevated scrutiny has pushed up the price of doing enterprise, including layers of compliance necessities for banks, insurers and different monetary establishments. Rebuilding belief with the FATF calls for a demonstrable dedication to tackling illicit monetary flows. Strengthening controls over Sim playing cards wouldn’t solely tackle a key space of vulnerability but additionally sign the nation’s willpower to scrub up its monetary ecosystem.
World wide, international locations are implementing stricter measures to control Sim card registration and utilization. As an illustration, in January India launched necessary biometric verification for all new Sim card registrations to curb monetary crimes. Nigeria, Bahrain, Bangladesh, the Philippines and the UAE have additionally applied stringent controls to make sure correct monitoring of Sim card customers. These insurance policies replicate a rising recognition that Sim playing cards are gateways to monetary techniques, and correct oversight is essential for combating monetary crimes.
Penalties
In South Africa, nonetheless, it stays alarmingly simple to accumulate a pre-registered (pre-Rica’d) Sim card, which may then be used anonymously. This non-enforcement of the Regulation of Interception of Communications and Provision of Communication-Associated Data Act (Rica) permits criminals to take advantage of cell networks for illicit transactions and cash laundering.
The implications of lax Sim card laws are already evident. In 2023, the Sunday Instances reported on R6.3-billion in suspect transactions despatched overseas via a remittance supplier by folks utilizing cellphones to switch cash from 56 967 totally different cellphone numbers. These suspect funds to Kenya, Somalia, Nigeria and Bangladesh, price billions, have been facilitated by improperly registered Sim playing cards. With out stronger controls, South Africa dangers turning into a hub for illicit monetary actions of this sort.
Learn: Sim card madness in South Africa
A serious flaw within the present Rica framework is part 40, which allows registered Sim holders – designated as “prospects” – to switch their Sim playing cards to others. Whereas this provision initially accommodated households with one particular person registering a card of their baby or partner’s identify, it has been exploited by large-scale distributors. These distributors, categorized as telecoms prospects, buy Sim playing cards in bulk, register them underneath generic firm names or incorrect ID numbers, and resell them to abnormal customers. This follow not solely undermines the intent of Rica but additionally creates a large accountability hole. It could simply be stopped if Sim playing cards are offered in tamperproof packaging, which mechanically makes it more durable for distributors to register playing cards incorrectly in bulk with out opening every card’s packaging and later resealing them.
Parliament is presently reviewing Rica, specializing in balancing the correct to privateness with the necessity for cellphone surveillance of suspected criminals. Nonetheless, in late 2024 in a solution to a parliamentary query, the division of justice has acknowledged the necessity for a extra complete overhaul of Rica and has convened a activity workforce to discover vital modifications.
Key amongst these reforms ought to be stricter controls over Sim card registration. Submissions to parliament have referred to as for measures similar to biometric verification, tamperproof packaging to forestall mass registration by distributors, and penalties for entrenched noncompliance with Rica. These measures would make it considerably more durable for criminals to acquire and use Sim playing cards anonymously.
Learn: I purchased a brand new Sim card that was already Rica’d by another person
The stakes are excessive. South Africa’s grey-listing has already tarnished its status and imposed vital financial prices. Escaping this standing would require daring motion, and addressing Sim card fraud is a vital step. Implementing stricter registration necessities, closing loopholes in Rica and making certain accountability at each degree of the telecoms provide chain won’t solely bolster the nation’s case with the FATF but additionally safeguard its monetary system from abuse.
By taking decisive motion to control and correctly package deal Sim playing cards, South Africa can show its dedication to combating monetary crime and reclaim its place as a trusted participant within the world economic system.
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- The writer, Farhad Khan, is a telecoms business government who has beforehand served as CEO of MTN Zambia and as chief industrial officer for Airtel Africa in Kenya. He writes in his private capability
