South Africa is under scrutiny as a funding hub for the Islamic State (IS), which sees the African continent as an opportunity for expansion following its defeat in Iraq and Syria in 2019. The US singled out South Africa as a country implicated in facilitating fund transfers for IS and other Islamist groups, imposing sanctions on suspected companies and citizens in 2022.
The lack of vigilance over the past 20 years is due to the fact that South Africa has never experienced terrorism-related problems. According to Hans-Jakob Schindler, director of the Counter-Extremism Project (CEP), “it is the Americans who indicated that something was not right in their country.” Currently, the entire South African government is working to address this concern.
In March, the Financial Action Task Force (FATF) placed South Africa on its “grey list” of countries with deficiencies in the fight against money laundering and illicit financing. Jasmine Opperman, South Africa’s counter-terrorism expert, regrets that it is now widely recognized internationally that the country is a hub for terrorist financing.
The increase in terrorist funding in South Africa is due to its democratic nature, a developed banking system, and a banking system that is sufficiently permeable to allow illicit activities. Al Qaeda, Hamas, Hezbollah, and other extremist organizations take advantage of the country’s active Muslim community, its democracy with porous borders, endemic corruption, and well-established criminal organizations.
The fact that Africa has become a major hub for IS and Al Qaeda over the past five years has led to an increased focus on South Africa. Intelligence reports suggest that South Africa has been used as a route to transfer funds, particularly to Mozambique and the Democratic Republic of the Congo.
South Africa’s financial system, Muslim community, and porous borders have been exploited by individuals and organizations involved in trafficking drugs, precious minerals, kidnapping, and extortion. The money moves through multiple transfers of small, inconspicuous sums and also through the hawala system, an informal method of payment based on trust that is even more difficult to trace.
While the exact magnitude of funds going to jihadists and their distribution among regional affiliates are not yet fully known, there is no shortage of money. Groups like IS earn enough to fund their operations. South Africa has reopened investigations into individuals suspected of involvement in terrorist activities and has enacted laws to combat money laundering and terrorist financing.
The South African government has adopted a proactive strategy in this area and has pledged to ensure that its territory is not used to prepare, facilitate, or carry out terrorist acts or to acquire, transport, store, or use funds in support of terrorism. In order to clean up its financial system, South Africa is taking steps to address this concern and is working closely with other countries and international bodies to combat terrorist financing.