Zondo Commission says ‘cash-in-transit’ firm and financial regulators were lax on money laundering

Cash in transit company did not follow regulations. Photo: ISTOCK

  • The Zondo Commission says financial regulators should be held responsible for allowing the flow of huge amounts of literal cash, which allowed money laundering.
  • The owner of a cash-in-transit company explained how it moved cash from banks to businesses.
  • She did not know that suspicious cash transactions had to be reported.
  • For more stories go to www.BusinessInsider.co.za.

A Springs-based “cash in transit” business, Asset Movement Financial Service (AMFS), and the financial oversight authorities came in for sharp criticism when it came to the weak steps they took to prevent money laundering.

In her testimony before the Judicial Commission of Inquiry into State Capture, chaired by deputy chief justice Raymond Zondo, on 24 June 2019, AMFS’s once owner, Kalandra Viljoen, said she operated a simple business.

All the now defunct business did, which Viljoen ran from early 2016 for almost three years, was pick up cash from banks and deliver it to businesses that might need the funds.

Viljoen said she took the necessary Financial Intelligence Centre Act (Fica) steps, like identity verification, to ensure that prospective clients were who they claimed to be. She even visited the office addresses of these clients.

Some careful enquiries by one of the commission’s evidence leaders, advocate Kate Hofmeyr, however, revealed all was not what it seemed at AMFS.

Under questioning, Viljoen acknowledged that she was not aware of the legal requirement that she had to ensure she act on “guidance notes” from the Financial Intelligence Centre.

One of these guidance notes, issued on 14 March 2008, required cash-in-transit businesses to “report suspicious transactions” to the relevant authorities. Viljoen said she was not aware of this note.

She also admitted she did not know that she had a legal obligation to keep records of information on her trade inquiries into prospective clients, as well as find out what the source of their funding was.

She also did not know she was required to do regular due diligence on her clients.

Despite not being up to date on the regulations governing her industry, AMFS was extremely successful, as at its peak, it was moving R500 million in cash a month. The group earned 0.3% fee on the amounts moved.

The large volumes of cash moving through the business, along with the poor internal controls, regarding details on whose behalf AMFS was actually picking up the cash for, left it vulnerable to money laundering.

This was evident in the first part of the commission’s report, released on Tuesday, saying it had discovered that millions in cash payments were made from state owned airline, SA Express, to a supposed supplier, Koreneka, a business AMFS had no connection to.

“Her [Viljoen’s] failure to have adequate measures in place allowed her business to be used by Koreneka, an entity with which she had no prior dealings and whose source of funds she had made no effort to establish, to convert R9 million of the money it had received from SA Express into cash.”

In the report, the commission said AMFS, was not as Viljoen claimed, merely picking up cash from banks and delivering it to a business. Rather, it was receiving deposits from the public as an ordinary feature of the business’s operations.

“As such, it was operating the business of a bank and required a licence from the Reserve Bank to do so.”

The commission also said in the report that those which had oversite of the financial sector, had fallen short when it came to managing these kinds of activities.

“Greater vigilance will be required from the financial sector regulatory authorities if this type of operation is to be stopped.”

It added: “Cash is extremely useful in the hands of those who wish to launder unlawful proceeds because once those proceeds are reduced to cash, they are untraceable. They can then end up in the hands of people of influence.”

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