Preventing escalating business fraud in South Africa starts with robust KYC

SA KYCWhile legislation and the introduction of new regulations aim to combat fraud and corruption, South African businesses have the power to fight financial crimes by ensuring consistent Know Your Customer (KYC) procedures are in place, according to Sameer Kumandan, managing director of SearchWorks, South Africa’s one of the leading innovative data aggregation platform

SearchWorks allows users to perform live, credible individual, company and property searches via more than 160 different search types. “With the obvious exception of the Financial Intelligence Centre Act (FICA), there is no universal set of KYC protocols for businesses to follow. Although demand is growing for more vigorous checks, the risk of businesses not carrying out KYC checks is substantial,” noted Kumandan.

PwC’s biennial Global Economic Crime and Fraud Survey found that South Africa’s rate of economic crime continues to remain significantly higher than the global average of 47%. Added to this is the stark reality that the incidence of high-value serious economic crime, or crimes with a value greater than US$100mn, is now 4%.

“Keeping the tainted funds of corrupt individuals and their networks out of the legitimate financial system is a vital outcome of effective KYC procedures. SearchWorks offers business the ability to perform a detailed politically exposed person (PEP) and Sanctions checks when onboarding new customers, as well as during the ongoing review of clients, to ensure that the organisation’s reputation, revenue and capital are well protected,” said Kumandan.

He adds that with respect to financial regulations, a politically exposed person (PEP) refers to an individual entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold.

“It is impossible to eliminate risk completely. However, by broadening the basic requirements of FICA and implementing more stringent KYC measures, more South African businesses can stop fraud and financial crime in its tracks,” added Kumandan.

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