The news that the National Prosecuting Authority (NPA) is seeking private sector expertise to form a digital evidence unit to help prosecute complex state capture cases is welcome. However, the development will not be a quick fix for South Africa’s longstanding weaknesses in addressing corruption and financial crime.
That’s according to James Saunders, co-founder, and CTO at regulatory technology (RegTech) software provider RelyComply. Saunders says the bold move could help South Africa accelerate its move off the Financial Action Task Force’s (FATF’s) greylist, which the country entered in 2023.
The unit will supplement the Directorate for Priority Crime Investigation’s (Hawks) resources with local and international private sector expertise in forensics. This will help to address a shortfall in resources and specialist expertise in handling complex financial crimes, especially in analysing complex digital evidence for financial crime investigations. It also involves helping the NPA extract evidence from encrypted devices.
Saunders cautions that government, financial institutions, and other ecosystem members should be alert to the risk of unintended consequences of this development. The NPA announced the initiative following the first joint meeting between the Presidency and Business for SA (B4SA) since the May elections.
This regular forum seeks private sector input to help address gaps and setbacks in state infrastructure. According to Saunders, the cooperation between government and business has positively impacted transport and logistics, but interventions for crime and corruption have yet to yield similar results.
He says that one of the complexities lies in the police and NPA’s need to remain independent from private interests, necessitating the creation of ethical walls between the institution and the new initiative. While these barriers are essential to mitigate the risks of undue interference, they may constrain the group’s efficiency and effectiveness.
“It is encouraging that the NPA is moving with a sense of urgency to resolve priority points from an existing 22-item action list ahead of the next FATF meeting in January 2025,” says Saunders. “However, this announcement raises a number of questions about the role of financial institutions and the impact on the wider private sector.”
These include:
- Setting up a private body to help prosecutors raises questions about where non-government funds come from. If large banks have to back the project, it’s another expense added to the high cost of compliance these institutions already have to bear. They might not have the capacity to sustain this level of support indefinitely.
- There’s a rush to resolve the compliance priorities and concern about whether this unit is a quick fix. What happens if it’s shut down as quickly as it was started up? Conversely, is a dedicated unit a more efficient long-term solution than capacitating the Hawks and NPA for digital forensics and complex financial cases?
- Already highly regulated due to complex anti-money laundering procedures, banks may also see themselves as targets on the radar of the NPA’s specialist digital evidence project.
“With only five months to resolve requirements, time is running out for the government’s plans to bear fruit,” says Saunders. “The upside is that the concerns I’ve raised can be navigated, provided the unit effectively uses knowledge from those on the frontlines of financial crime and regulatory compliance. This initial move could lead to more informed collaborative action to keep financial crime at bay.”