Unmasking money laundering in South Africa: How dirty money gets cleaned
Money laundering is not just a financial crime – it’s a systemic enabler of corruption, state capture, and economic inequality. It threatens the delivery of essential services and deepens injustice in a country where trust in institutions is already strained. While often seen as a white-collar crime, money laundering has real-world consequences. It keeps public money out of service delivery, fuels violent crime, and deepens inequality – hurting the very people who can least afford it.
Dirty money is cash or assets that come from illegal activities – like drug trafficking, fraud, corruption, or organised crime. It can’t be openly used or invested without raising suspicion, which is why criminals try to ‘clean’ it through money laundering.
What is money laundering?
Money laundering is the process of disguising money obtained through illegal activities to make it appear as though it comes from legitimate sources.
It generally follows a three-step process:
- Placement: Illegally obtained funds are introduced into the financial system, often in small amounts to avoid detection.
- Layering: The money is moved through various transactions to obscure its origins, including converting it into assets or moving it between multiple accounts.
- Integration: The laundered money re-enters the economy as apparently legitimate income, often used to buy property, fund businesses, or acquire luxury items.
How it happens in South Africa
A common local scenario might involve a drug dealer who owns a cash-heavy business, such as a taxi company or restaurant. Illicit funds are deposited in small amounts (placement), disguised within the legitimate income of the business (layering), and then used to buy a house or luxury car (integration).
But the web of money laundering extends far beyond individual criminals. It often involves professional enablers:
- Banks and Financial Institutions: These are frequently used conduits. If a bank fails to file a Suspicious Transaction Report (STR), it could face penalties. According to the FIC’s 2025 Sector Risk Assessment on Crypto Asset Service Providers, CASPs filed over 7 000 STRs in the 2023/24 financial year – highlighting how financial institutions remain at the centre of identifying laundering attempts.
- Real Estate Agents: Properties, especially in luxury markets, are used to launder vast sums. The FIC notes the risks posed by unregistered or under-regulated entities. Open Secrets and other watchdogs have reported that luxury developments in cities like Cape Town are being exploited by politically exposed persons from across Africa.
- Lawyers: Legal professionals sometimes facilitate transactions without performing proper due diligence. The FATF has flagged legal professionals as high-risk facilitators in complex laundering schemes. Trust accounts and property transactions handled by attorneys are particularly vulnerable.
- Trust and Company Service Providers: These can be used to create shell companies that hide ownership. Without robust transparency laws, these entities hinder investigation efforts. (Read more)
- Crypto Asset Service Providers (CASPs): The FIC classifies CASPs as high-risk due to their use of privacy coins, peer-to-peer platforms, mixers and cross-border anonymity.
- High-Value Goods Dealers and Vendors: Businesses dealing in vehicles, jewellery, art, or electronics can be exploited when customers insist on large cash payments or split payments to avoid detection.
CASE IN POINT: Between 2016 and 2018, relatives of former DRC President Joseph Kabila bought over a dozen properties in South Africa using proceeds linked to public funds looted through BGFIBank. Despite red flags, transactions were processed without adequate scrutiny (Aljazeera).
The professional status of these industries often lends legitimacy to illicit transactions, allowing criminals to bypass scrutiny. The FATF’s 2024 follow-up report underscores that while South Africa has made significant regulatory progress, sustained increases in complex money laundering prosecutions remain a gap.
The role of the Financial Intelligence Centre (FIC)
Established by the Financial Intelligence Centre Act (FICA), the FIC is the body responsible for:
- Receiving and analysing financial data
- Producing financial intelligence for investigations and prosecutions
- Enforcing compliance among accountable institutions
The FIC works with laws like the Prevention of Organised Crime Act (POCA) and POCDATARA to combat financial crimes. Non-compliance with FICA can lead to fines or prosecution. Robust Know Your Customer (KYC) procedures are critical.
The Greylisting and Real Estate laundromat
South Africa was greylisted by the Financial Action Task Force (FATF) in 2023. Reforms followed. According to Open Secrets, luxury property deals have been used by politically exposed persons (PEPs) to launder money. Their report “For Sale: South Africa’s Property Laundromat“ highlights:
- Over R160 million laundered by elites from countries like the DRC and Mozambique.
- Use of shell companies and lack of due diligence by estate agents and law firms.
- Ongoing inequality in Cape Town, where luxury developments coexist with housing backlogs.
The FATF has confirmed South Africa has addressed 20 of 22 action items. But two remain—related to the prosecution of complex laundering and terrorist financing. The next FATF review will assess sustained progress (FATF Greylisting Update, 2025).
The hidden risks for South African businesses
A 2024 report by DocFox warns that businesses in high-risk sectors – legal, real estate, financial services, and luxury goods – are at risk of becoming laundering conduits. Criminals exploit sectors capable of facilitating large, complex transactions.
Estimated annual laundering volume? Between R16 billion and R64 billion – a significant distortion to the economy.
What you can do
- Ask questions – especially in high-value or unusual transactions.
- Insist on clear identification and source of funds.
- File suspicious transaction reports when something doesn’t add up.
- Use tech tools to enhance compliance.
- Train your team to recognise red flags.
What needs to change?
Open Secrets and others recommend:
- Seize suspect assets early
- Sanction negligent professionals
- Repatriate looted funds
- Train accountable institutions
- Adopt just urban housing policies
- Enhance KYC systems and oversight
The machinery that enables corruption and weakens democracy
Money laundering in South Africa is not just a by-product of crime—it is part of the machinery that enables corruption and weakens democracy. It is one of the reasons public housing is delayed, hospitals go underfunded, and crime syndicates remain untouchable. By exposing how it works and who benefits, we can support reforms and demand stronger accountability.
Ending money laundering isn’t just about stopping criminals – it’s about protecting democracy and reclaiming public wealth. South Africans deserve to know that justice isn’t only for the poor. Let’s make the system work for all of us.
Stay informed. Stay engaged. Justice depends on it.