Chapter 5

Implementation of Legislation to Curb Organised Crime and Money-Laundering

Overview

The current implementation of legislation against money-laundering and organised crime is considered in this chapter. Broadly speaking, this is the task of the investigating and prosecuting authorities. Within these groupings, there are a number of institutions that may be involved in money-laundering investigations linked to organised crime.

In the SAPS, the investigation of organised crime is the task of the detective service. This service comprises a number of components. Of these components, it is mainly the Commercial Branch and the Component: Organised Crime that will deal with money-laundering investigations. Investigations of criminal activity linked to organised crime are carried out primarily by the Component: Organised Crime, the Component: Specialised Investigations, the Component: Serious and Violent Crimes and the Commercial Branch.

The National Prosecuting Authority comprises offices of Directors of Public Prosecutions for each seat of the High Court. Any of the Directors of Public Prosecutions may institute prosecutions concerning money-laundering and organised crime activities. Apart from the offices of the Directors of Public Prosecutions there is also the office of the National Director of Public Prosecutions. It includes the Investigating Directorates for Serious Economic Offences and for Organised Crime, the Asset Forfeiture Unit, and the Directorate for Special Operations (nicknamed the ‘Scorpions’).

Increasing use is made of specialised, multidisciplinary investigative teams. These teams focus their investigations mainly on specific organised criminal groups, rather than on specific criminal activities. This allows them to conduct their investigations proactively instead of only reacting to crimes that have already been committed. The SAPS and some of the prosecuting authorities such as the Directorate for Special Operations use this approach. The teams involved in such investigations typically include investigators and public prosecutors, as well as other persons such as forensic accountants, when appropriate.

Implementation of the law

The money-laundering and racketeering offences defined in the Prevention of Organised Crime Act form part of the statutory criminal law of South Africa. This means that incidences of these offences, just like any other, are to be investigated by the SAPS and prosecuted by the relevant prosecuting authority. The same applies to the many other forms of criminal activity in which organised criminal groups may become involved.

This is a very simplistic view of the matter. Since the elements of a money-laundering scheme are by design misleading, the investigation and prosecution of such a scheme are normally very complex tasks. Other criminal activities of organised criminal groups often take place on a level far removed from the persons who receive the bulk of the proceeds from these activities. These factors make the investigation and prosecution of organised crime activities, and especially money-laundering, tasks for highly skilled and well-resourced investigators and prosecutors.

South African Police Service

The investigation of organised crime activities, including money-laundering, is the responsibility of the detective service of the SAPS.89 The SAPS has been involved in investigations of organised criminal activities on a professional basis since 1991. Organised Crime Investigation Units at provincial level have been in operation since 1994. Since May 2000, a component within the detective service at the level of the national head office has been responsible for the management functions associated with the investigation of the criminal activities of organised criminal groups.

At national level, the detective service consists of eight components. Of these eight components, five are responsible for the investigation of crime. The remaining three provide support services to the investigative components. The investigative components are Evaluation, Monitoring, & Operational Development; General Investigations; Organised Crime; Specialised Investigations; Serious & Violent Crime; and the Commercial Branch (figure 4).

Organised crime investigations can be carried out by any of the investigative components of the Detective Service. However, the bulk of the organised crime investigations are carried out by the Component: Organised Crime, the Component: Specialised Investigations and the Commercial Branch. The Commercial Branch and the Component: Organised Crime carry out the majority of money-laundering investigations associated with organised criminal groups. The relation and division of functions between these components will become clear from the discussion below.

The South African Police Service Act of 1995 provides an indication of what should be considered as ‘organised crime’:90

National prevention and investigation of crime

16(1) Circumstances amounting to criminal conduct or an endeavour thereto, as set out in subsection (2), shall be regarded as organised crime, crime which requires national prevention or investigation, or crime which requires specialised skills in the prevention and investigation thereof.

(2) Circumstances contemplated in subsection (1) comprise criminal conduct or endeavour thereto -

(a) by any enterprise or group of persons who have a common goal in committing crimes in an organised manner;

(b) (i) by a person or persons in positions of trust and making use of specialised or exclusive knowledge;

(ii) in respect of the revenue or expenditure of the national government; or

(iii) in respect of the national economy or the integrity of currencies;

(c) which takes on such proportions or is of such a nature that the prevention or investigation thereof at national level would be in the national interest;

(d) in respect of unwrought precious metals or unpolished diamonds;

(e) in respect of the hunting, importation, exportation, possession, buying and selling of endangered species or any products thereof as may be prescribed;

(f) in more than one province or outside the borders of the Republic by the same perpetrator or perpetrators, and in respect of which the prevention or investigation at national level would be in the national interest;

(g) in respect of which the prevention or investigation requires the application of specialised skills and where expedience requires that it be prevented or investigated at national level;

(h) which a Provincial Commissioner requests the National Commissioner to prevent or investigate by employing expertise and making resources available at national level and to which request the National Commissioner accedes;

(i) in respect of which the investigation in the Republic by the Service is requested by an international police agency or the police of a foreign country; and

(j) in respect of which the prevention or investigation by members under the command of a Provincial Commissioner will detrimentally affect or hamper the prevention or investigation of circumstances referred to in paragraphs (a) to (i).

This description, coupled with descriptions of an organised criminal group included in international instruments are used as the criteria upon which criminal activity is judged to determine whether it can be described as organised crime. An example of one such international instrument is the draft United Nations Convention against Transnational Organised Crime:91

(a) ‘Organized criminal group’ shall mean a structured group of three or more persons, existing for a period of time and acting in concert with the aim of committing one or more serious crimes or offences established in accordance with this Convention, in order to obtain, directly or indirectly, a financial or other material benefit …

The identification and institution of organised crime investigations happen both proactively and reactively. Reactive investigations are carried out when a crime has been committed and the investigation falls within the responsibility of any of the following components: Evaluation, Monitoring, & Operational Development; General Investigations; Specialised Investigations; Serious & Violent Crime; and the Commercial Branch.

Proactive investigations are identified on the basis of national or provincial organised crime threat analyses that are carried out by the SAPS. Organised crime threat analyses are derived from the national and provincial crime threat analyses as the case may be. The crime threat analyses, in turn, are determined from reports on crime from station level upwards via the provincial structures of the SAPS. Crime threat analyses and organised crime threat analyses are therefore important tools in determining priorities and applying resources with regard to organised crime investigations.

Proactive investigations focus on the higher ranking members of the organised criminal group who are removed from the actual commission of crimes by their subordinates. These investigations are conducted on a project management basis. This means that, for each investigation of this nature, a project plan is developed comprising descriptions of starting and closing dates, intermediate target dates and personnel, as well as the budgetary and other resource implications of the project.

The National Organised Crime Secretariat undertakes the prioritisation and allocation of projects at national level. All the component heads of the detective service are represented in the secretariat. As a consequence, the managements of the investigative components of the detective service jointly undertake the prioritisation and allocation of projects concerning organised crime. This ensures that the correct priority, in accordance with the national organised crime threat analysis, is accorded to each project and that each project is investigated by the most appropriate investigating unit. The National Organised Crime Secretariat is mirrored by provincial counterparts that perform the same function at provincial level.

Single dimensional investigations concerning organised criminal groups (where only one type of criminal activity is involved) are allocated to the unit or component responsible for this type of activity. In the majority of cases, this will be the Commercial Branch or one of the units within the Component: Specialised Investigations such as Vehicle Crime, Illegal Aliens or the SA Narcotics Bureau.

Multidimensional investigations (where a variety of criminal activities are involved) are allocated to the Component: Organised Crime. The objective of the component is to investigate organised crime effectively through the gathering, management, use and dissemination of information concerning organised crime.

Certain criteria must be met before the National Organised Crime Secretariat will allocate a project to the Component: Organised Crime. The criminal activity concerned must consist of the systematic commissioning of serious crimes by an organised criminal group with the view to obtain profit or power. It must extend across the responsibilities of more than one of the investigative components of the Detective Service or across provincial or national borders. All conventional investigative techniques must have been exhausted without success.

Projects allocated to the Component: Organised Crime are undertaken as long-term operations. These operations are aimed at identified organised criminal groups as opposed to the uncovering of specific crimes. In the course of an operation, the Component: Organised Crime makes use of the investigating capacity of provincial Organised Crime Investigating Units. It may also make use of the specialised knowledge of members of other investigating units or components.

The Component: Organised Crime interacts with institutions outside the SAPS in the course of its operations. These institutions include the prosecuting authorities, the Department of Home Affairs, the South African Revenue Service and the various intelligence agencies. The relevance of involving the prosecuting authorities is in the fact that investigations are primarily prosecution-oriented. Investigating teams therefore include members of the local prosecuting authorities or of components of the National Prosecuting Authority such as the Directorate of Special Operations, the Investigating Directorate for Serious Economic Offences and the Asset Forfeiture Unit.

Prosecuting authorities

The National Prosecuting Authority comprises Directors of Public Prosecutions for each seat of the High Court.92 In practice, a Director of Public Prosecutions is appointed for each provincial seat of the High Court and one for the Witwatersrand Local Division. Apart from these structures, the National Director of Public Prosecutions includes offices of Investigating Directors for Serious Economic Offences and Organised Crime, the office of the Director for Special Operations and the Asset Forfeiture Unit.

The aim of the Asset Forfeiture Unit is to ensure that the confiscation and forfeiture of criminal assets are used effectively. This is in accordance with international experience that has shown that forfeiture provisions will not be applied on a large scale unless a dedicated unit is created for this purpose. The main reason is that a confiscation and forfeiture system normally consists of a complex mixture of criminal and civil laws, as well as a range of concepts that are new to both criminal and civil law. This requires the employment of forfeiture specialists to build up the necessary expertise in order to ensure the effective application of the relevant laws.93

The Asset Forfeiture Unit focuses on the application of the confiscation and civil forfeiture provisions included in the Prevention of Organised Crime Act. In this regard, the unit plays an active role by drafting papers used in the course of court proceedings under the at and, occasionally, appearing in such proceedings. The unit also plays a facilitating role, lending assistance in the course of investigations with the aim of effecting confiscation or forfeiture of criminal proceeds.94

The office of the Investigating Director for Organised Crime and Public Safety has as its main focus the prosecution of certain violent crimes that are associated with organised crime. These crimes include vehicle hijackings, political violence and gang violence. The office of the Director for Special Operations comprises investigative teams consisting of intelligence personnel, investigators and public prosecutors. The approach of this office is to identify the organised criminal groups that present the most serious threat and to conduct proactive investigations on a project basis into the activities of these groups. These projects will be undertaken in the form of prosecution-driven investigations. This means that the investigative team will function under the guidance of a prosecutor. The prosecutor will be responsible for orchestrating the efforts of the multidisciplinary team in order to gather evidence that can be presented in a court of law.

None of the money-laundering offences that have been on South Africa’s statute book since 1992 have been applied in a money-laundering prosecution. The type of expertise needed to conduct a money-laundering investigation and effect prosecution is similar to that needed for a successful confiscation or forfeiture procedure. In both cases, thorough financial investigations are required to track the assets in question, as laundered assets will almost inevitably also be the object of forfeiture proceedings.

For this reason, the Asset Forfeiture Unit may become involved in future money-laundering investigations and prosecutions, albeit in a facilitating capacity only. The type of assistance that the Asset Forfeiture Unit will be able to render mainly concerns financial investigations and advice on the requirements of the money-laundering provisions of the Prevention of Organised Crime Act.

Prosecutions for money-laundering activities can be carried out by any provincial Director of Public Prosecutions, as well as any of the directorates in the office of the National Director of Public Prosecutions. The prosecution of an underlying criminal activity will almost always occur when there is a money-laundering prosecution. Therefore, it will usually be the task of the prosecuting authority that is conducting the prosecution for the underlying criminal activity to conduct the money-laundering prosecution, possibly with the assistance of the Asset Forfeiture Unit as indicated above.

Investigations of organised criminal groups performed by the office of the Director of Special Operations will also invariably uncover money-laundering activities. The investigative team concerned will be responsible for the investigation and possibly also the prosecution of the relevant money-laundering offences. In this regard, the Asset Forfeiture Unit may also become involved in a supportive capacity, lending assistance with financial investigations and confiscation or forfeiture proceedings.