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The cash delivery go-between

Easily transportable, easily dispersed, no trail?

Ignorance of the law is no excuse for breaking it.

This was painfully teased out by the testimony of Kalandra Viljoen, director of Asset Movement Financial Services (AMFS), at the Commission of Inquiry into Allegations of State Capture on Monday.

AMFS was a cash-in-transit business, the middleman that enables an entity to make a payment (seemingly a transaction), and receive it back in cash, neatly packed into plastic bags. Easily transportable, easily dispersed, no trail?

AMFS, now sold and possibly liquidated, handled a lot of cash.

In its heyday in 2016/2017, it could have moved as much as half a billion cash a day. Viljoen was at times a bit sketchy on the details; she couldn’t remember exactly when the peak was.

It must be hard to distinguish between R300 million and R500 million cash?

AMFS business model

A client would phone Viljoen and inform her that they needed cash, and would then deposit the money in AMFS’s bank account. Clients didn’t always use reference numbers on bank deposits, and confirmation was made telephonically. She could receive up to a 100 calls a day.

Viljoen would then transfer the funds to SBV Services (a traditional cash-in-transit business), which would pack the cash into clear plastic bags. Her drivers would collect the cash from SBV and deliver it to the client.

And why did clients use her services? Because she delivered the cash in unmarked vehicles.

She vetted the source of deposits into AMFS’s bank account by phoning the client to check if they had deposited it. She was under the impression that it was the bank’s responsibility to check the origin of electronic deposits.

Fica

Viljoen was firmly of the view that AMFS would be classified under the Financial Intelligence Centre Act (Fica) as a “money remitter”.

All her clients were Fica’d by her. In her opinion, this required obtaining copies of their IDs, income tax numbers, and physical addresses.

She would visit their premises, and ask about their businesses. She would know that “it all added” up when she “got the feeling inside that it was all okay”. She didn’t take notes. “Vetting” the delivery address was important to ascertain whether it was a security risk for deliveries of cash.

But Viljoen’s idea of vetting fell way short of what is required under the law.

‘Control measures?’

She had no knowledge of the Fica regulatory and legislative requirements – was unaware of the control measures for money laundering, and didn’t know about the measures to be put in place to guard against businesses being used for money laundering.

Viljoen had not kept up to date with the guidance notes issued by Fica, and wasn’t aware that she was legally obliged as an accountable institution to do so. Nor was she aware of “suspicious transaction reporting” (the need to report a transaction or series of transactions that would be likely to facilitate the transfer of the proceeds of unlawful activities).

She never made a suspicious transactions report. She wasn’t aware that she had to carry out ongoing due diligence on her clients.

Viljoen was not aware of the requirement that every financial institution develop a risk management and compliance programme, and had not developed one.

Viljoen did not understand how one would go about verifying the source of funds, and had entered into business relationships with clients not having carried out all the steps required by Fica (verify the identity of the client/relevant person, verify the source of funds, conduct ongoing due diligence).  

Viljoen was not aware of the obligation to keep records of due diligence and all transaction records, nor the requirement that records be kept for five years.

The Hawks

Viljoen was contacted by the Directorate for Priority Crime Investigation, otherwise known as the Hawks, in March 2018 in respect of Koroneka Trading and Projects. They later met at a restaurant.

Koroneka has been implicated in suspect payments involving the North West government.

Viljoen realised that this had something to do with controversial businessman George Markides.

Before the meeting with the Hawks she contacted Markides’s PA to obtain copies of the receipts (proof that the funds were delivered). Viljoen’s own copies were possibly lost during a previous heist.

However, Viljoen did not establish the authenticity of the delivery notes from Markides before she handed them over to the Hawks, but when she handed them over she saw that they were not her delivery notes. It appeared they were Markides’s on-delivery notes.  

This changed everything, as Viljoen then assumed that these funds were not used for his business but went on to someone else.

She was not unduly perturbed by this.

Koroneka transactions

The transactions related to Koroneka comprised three deposits made in 2015 amounting to R9 million. The deposits were referenced “Koroneka”, but Viljoen assumed that Koroneka was used for Markides’s own referencing purposes. Viljoen is not in possession of delivery slips, but confirmed that the funds were delivered to Markides’s place of business.

Viljoen tried to assert that the steps she took to identify her client under Fica were adequate, but on being reminded that she had no way of knowing that another entity was in fact transacting with her, she had to admit that the steps she had taken were not adequate.

Fica includes in its list of unusual businesses a business that receives deposits of funds with a request for their immediate transfer elsewhere. Evidence leader advocate Kate Hofmeyr asked Viljoen if this was not a description of her business.

Viljoen had to agree (somewhat reluctantly).

Hofmeyr described to the commission a run-of-the-mill cash-in-transit business, which doesn’t enter into transactions but simply moves money between its client and the client’s bank. The movement of cash between a retailer and a bank is an example.

Operating the business of a bank

Under the Banks Act, businesses identified as “money remitters” would only include banks and foreign exchange services. Any business that receives money from the public – and pays it back to them over time – is operating the business of a bank, and should be registered as such.

Homeyr put it to Viljoen that if AMFS was operating as a bank, it would have to have been registered as a bank. “Were you aware of this?” Viljoen said no.

Hofmeyr declared that any entity receiving deposits, and ensuring that they are repaid subject to the terms agreed between the entities, would have to be registered as a bank.

Conducting the services of a bank without being registered as a bank is a criminal offence It may also result that all of the proceeds obtained may have to be paid back. Viljoen was not aware of these provisions.

Eyes wide shut

Hofmeyr further pointed out that Viljoen now knows that she was misled by Markides and that the amount of R9 million deposited with AMFS came from him. Viljoen has subsequently established that these funds came from Koroneka Trading and Projects CC.

Hofmeyr referred to a flow-of-funds diagram that had been prepared by the commission, showing the movement of funds from the North West government to SA Express and then to Koroneka, or from North West directly to Koroneka, and from there how the funds had been dispersed to various entities, including the R9 million payment from Koroneka to AMFS.

Viljoen has given evidence that the funds were received from Koroneka, then converted into cash and delivered to Markides.

Viljoen had never vetted Koroneka as a client. Nonetheless, she took her fee from the R9 million, and delivered the rest to Markides. 

Blissfully ignorant, seemingly innocent, eyes wide shut, Viljoen thanked the commission for their time.

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COMMENTS   14

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This corruption is bigger than any possible imagination, and this lady with all rotten apples need to rot in Jail. But again not in this, new South Africa. Those who chose the rotten leadership were warned, this mess is gigantic & will see the end of this once a Great Country. We all know who is the source……….the laws must firm and apprehend all thieves…..it shockin

This is well put: “Blissfully ignorant, seemingly innocent, eyes wide shut, Viljoen thanked the commission for their time.”

Great piece. I just wonder if playing this dumb is not a survival tactic as she may not know banks act but she must know her some of the clients are seriously bad people and will kill to stay out of jail or keep their ill-gotten gains.
She is not avoiding jail but being dead meat.

I get that retailers and some businesses take in large amounts of cash that must then get to a bank.

But I don’t get that businesses would need such large amounts of cash delivered to them. What are possible needs:
1. Virtually all wages should nowadays be direct-deposit? Virtually all the social welfare recipients have bank accounts so people with jobs and cel phones must have bank accounts.
2. I would not do business with a supplier that insists on being paid in notes.

Johan, I think that’s the point of the article – there is no commercial logic which should have triggered a suspicious transaction report. However money launderers aren’t well known for abiding to FICA!!!

Have you ever asked why you CANNOT pay your car licence renewal at a Post Office in cash?

ANC want perpetual corruption without being caught.

The comments and assumptions made here are not correct. She was NOT operating as a bank or a remittance agency. The source of funds in all cases were the BANKS. She was given a TRANSFER from a bank. It was the banks’ duty to check the origin of funds not hers else you are implying that every single retailer would need to vet you for your grocery payments. She saw a gap to run a legitimate business and until it can be proved that somehow knowingly aided and abetted the hawks should focus rather on the “SOURCE” of funds.

The business is considered an accountable institution, thus is required to verify the source of funds. The fact that the funds were received from a bank (aren’t all funds received from a bank?) does not alleviate the FICA requirements.

and how exactly do you think she could do this verification? Call the bank? Do you think she will pass 3 security questions for this account? No her business is to transport cash not police cash. If the banks and government are failing in their policing duties she cannot be held liable. She gets transfers then she transports the cash on your behalf. that’s where it ends

@Shaokhan, the same way every other individual and business provides proof of a bank account, a confirmation letter from the bank…..

If she does not trust the confirmation letter, there are external 3rd party services that provide FICA verification, including bank accounts – DocFox, ThisIsMe – in fact its easy to automate.

As the writer said: “Blissfully ignorant, seemingly innocent, eyes wide shut….”

ladies and gentlemen … we have our fall guy! or, at least, lady. Great article, an anatomy of staggering stupidity vs skillful thievery. I would love to know who initially roped her in? Was it via a romantic tryst or a clever business offer?

What a dilemma: Either launder money for the ANC and organised crime or get robbed.

Second-hand car dealerships simply cannot handle those kinds of sums.

Possibly also the reason for the high cash in transit heists during that period….”people” knew about large amounts of cash being moved?

Who are her clients? Who are the directors of Asset Movement Financial Services? How did she manage to operate a business dealing in billion of rands?

You really can’t make this sort of stuff up …

At least she had the good sense to avoid Bosasa. Hey Angelo, how come you did not use her? Was she too honest for you?

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