After the Bell: Off the grey list, on to the to-do list

There are times when we do show that, as South Africans, we are able to move quite quickly when the pressure is on. We can still mess it up, but sometimes we show we can pull together and do things.

The decision by the Financial Action Task Force (FATF) to remove us from its grey list obviously comes after a huge amount of work and coordination involving several players.

Key to all of this was that we are in a situation where our government ministries, agencies, institutions and regulators were able to work together. Crucially, along with the private sector.

But we should not forget why we were able to do this. There was really no political controversy that divided us. Pretty much all of our political formations wanted us off the grey list. That, and the relatively small number of people in our elite who were involved in this, obviously made it much easier to do.

I do think, though, that there is a really important lesson in this.

We sometimes forget how important it is that the government can improve. If we don’t believe that it can, we won’t put pressure on officials to keep improving things.

For me, the end of load shedding was the first big proof that the government can reform itself.

The second – and this is vital – lies on how the South African Revenue Service has improved so dramatically.

Getting off this grey list might be the third proof we need.

Now, three reform victories do not mean the lives of millions of people are suddenly and dramatically improving. Especially if they are living in an area of load reduction. But there are some other areas in which the government seems to be getting its act together.

Five years ago, during the pandemic, I had to get a new driver’s licence card. And you may remember how, at the time, that seemed close to impossible. In the end, success required a camping chair and lots of patience.

This time around, having received many of your kind emails suggesting I just make an appointment at the Waterfall licensing centre, I did just that. I received an email moments later confirming my booking.

Scarred by previous experiences with driver’s licence cards, I booked the earliest possible slot, at 7.30am, simply because I have a regular appointment at 10am.

Based on what you’ve told me, that might have been foolish. It looks like the whole thing takes half an hour (I’ll update you on how it goes).

I hate to be this person, but not everyone in the financial world is celebrating the FATF and our “victory”.

There is an argument against all of this monitoring of our transactions. It was put very forcefully by Professor Brian Benfield, who argued a couple of weeks ago that the whole mechanism for monitoring transactions has failed.

His point is that forcing each entity to keep a lot of data about their clients for any transaction above R100,000 is incredibly onerous.

And he quotes the UN Office on Drugs and Crime, which suggests that 2.5% to 5% of global GDP is laundered every year.

This, he says, proves it’s been a failure.

Except, of course, that there is no way of knowing what the picture would be if this international system of monitoring transactions did not exist.

Surely it would be much higher. And the more obstacles to illegal financial flows, the better.

We have become so used to the whole regime of information to do these transactions that we don’t really think about it anymore. But it must increase the cost of transactions, thus the costs of institutions and thus on the economy as a whole.

I do think that one of the virtues of making big financial transactions difficult for criminals,  is that it will force them to use cash, and that means they are likely to have a lot more fallings-out between them.

But, obviously, that is not going to happen, because, if you believe the praise singers, cryptocurrencies are about to change everything, in particular stablecoins (which are a unit of cryptocurrency tied to the value of the dollar – although it seems there have not been independent audits to verify this), which means this entire system may soon just become useless.

People who really want to conduct transactions for illegal purposes will just use those systems to move money around. And they can do it totally anonymously and quickly.

It is obvious that moving money around will always involve this tension between monitoring, transaction costs and control. And this tension will ebb and flow from time to time.

Less obvious is whether our government will continue to improve.

But one can hope. Especially ahead of an early appointment on Friday. DM