South Africa Must Tackle Sim Card Fraud To Escape Fatf Grey List

The country was grey-listed in 2023 amid concerns it was being used as a hub for illicit financing and cross-border money flows. While addressing systemic issues in the financial sector is a complex and multifaceted challenge, there is one relatively simple fix that could yield significant progress: tightening controls over Sim card registration and usage.

In today's digital age, phones are no longer just tools for making calls they have become essential financial instruments. South Africans use them for banking, cross-border money transfers and everyday financial transactions. Recognising this shift, telecoms companies have evolved their business models, diversifying into financial services and offering loans, insurance and mobile money payments. With the increasing convergence of telecoms and financial systems, ensuring the integrity of Sim card registration is more critical than ever.

South Africa's grey-listing, resulting from concerns around a lack of money laundering controls, has already had significant repercussions. The increased scrutiny has driven up the cost of doing business, adding layers of compliance requirements for banks, insurers and other financial institutions. Rebuilding trust with the FATF demands a demonstrable commitment to tackling illicit financial flows. Strengthening controls over Sim cards would not only address a key area of vulnerability but also signal the country's determination to clean up its financial ecosystem.

Parliament is currently reviewing Rica, focusing on balancing the right to privacy with the need for phone surveillance of suspected criminals. However, in late 2024 in an answer to a parliamentary question, the department of justice has acknowledged the need for a more comprehensive overhaul of Rica and has convened a task team to explore significant changes.