R6.3bn allegedly moved offshore through spaza shops amid terror funding concerns
A report has raised concerns about billions of rand allegedly leaving South Africa through informal remittance networks linked to the township economy.
According to a new report, up to R6.3 billion generated by foreign-owned spaza shops in South Africa may be moving out of the country through unregistered financial channels, amid concerns about terror funding. The report, titled The Nature of Stealthy Remittance in South Africa, suggests that such unmonitored flows contributed to weaknesses in South Africa's systems for detecting money laundering and terrorist financing.
The Financial Action Task Force (FATF) had placed South Africa on the grey list due to these concerns. The report further alleges that funds transferred through such networks reached terrorist cells operating in countries like Kenya, Somalia, Nigeria and Mozambique. The study also highlights that about 32,824 out of the 87,000 spaza shops in South Africa are owned by non-South African citizens.
Despite the government's data, regional estimates and informal-sector figures suggest that foreign nationals likely operate a significantly higher proportion of unregistered or informal township stores. The report warns that remittances through informal channels often occur outside the formal financial system, making transactions unrecorded and untaxed in both the host country and the recipient's country.
This creates difficulties for tax authorities and financial regulators in tracking financial flows and ensuring compliance with regulations.
Written by urgent.news from IOL's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
