By Odwa Mkentane
A new report is raising concerns about illicit financial flows linked to foreign-owned spaza shops in South Africa. It estimates that around R6.3 billion generated through these businesses was moved out of the country through informal remittance networks, highlighting concerns about money laundering, terrorist financing and gaps in financial oversight.
Speaking to VOC, Andre Thomashausen, a retired professor of international law at Unisa, said The Saturday Star report highlights the use of informal international money-transfer networks that can move large amounts of money across borders quickly. However, it remains unclear whether any of these funds are being used to support insurgent groups in northern Mozambique, as authorities lack sufficient evidence to trace the money and determine its destination.
“There are various informal financial systems that allow money to be moved quickly between countries and even continents. For example, someone could hand over R200,000 in South Africa and, within minutes, the equivalent amount could be made available in Dubai, Astana or New York. These are large international networks, and South Africa faces challenges in controlling them.
“It is difficult to say whether some of this money is being used to fund terrorist or insurgent groups in northern Mozambique. There has recently been a case involving a South African worker who was kidnapped there, with ransom negotiations reportedly taking place. If authorities had precise information about where the money was coming from and where it was going, law enforcement and security agencies would be able to act. The problem is that much of this information remains unknown,” said Thomashausen.
Thomashausen added that South Africa’s formal banking system has very strict controls. It is extremely difficult to transfer large amounts of money from South Africa to countries such as Russia or to areas in northern Mozambique without undergoing strict checks and completing the necessary paperwork.
“This raises questions about how insurgent groups in Mozambique receive funding. Their operations require money, so there must be informal channels through which funds are moved. One possibility involves informal trading and transport networks stretching from Somalia through Mozambique. There are also claims that money could be moving through business networks, including some informal trading and spaza-shop operations. However, these are theories and have not been proven,” Thomashausen said.
Photo: Pixabay
