Former British MP Lord Peter Hain. Screengrab
Former British MP Lord Peter Hain. Screengrab

Banks, auditing firms should be first line of defence against money laundering, says Hain

By Zintle Mahlati Time of article published Nov 18, 2019

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Johannesburg - Former British MP Lord Peter Hain has blamed the lack of transparency by professional institutions which aided the Guptas by transferring illegally obtained money through countries for making state capture possible.

Hain took the stand on Monday and told the commission that it “takes two to tango” and that private institutions such as banks, public relations firms and consultancy firms played a key role in aiding the Gupta family to transfer their funds around the world.  


"It (state capture) was facilitated by the massive complicity of international financial institutions and other institutions, as well as other foreign governments,” he said. 


He highlighted British banks such as HSBC and Standard Chartered which the Guptas used to channel money. He said these institutions assisted the family financially.


"And they seemed to have assisted the Guptas in two main ways, namely opening accounts and providing access to their international pipeline. They've granted them an open door to an international network through depositing money into local accounts," he said.


Hain said they could not deny that they never knew the source of the funds as there were plenty of red flags about the family. 


"They should have spotted these red flags earlier and should have dealt with them immediately,” he said. 


Hain also spoke of what he called “professional enablers’ which include lawyers, auditors and estate agents that helped clean illegally obtained funds. He said examples such as the work done by auditing firm KPMG for the Guptas, shows how culpable institutions could be. 


KPMG had audited the family’s books and the infamous 2012 Sun City wedding was noted as “business work” in the auditing process. The family used the money obtained from the failed Vrede dairy farm project to fund the wedding. 


He said banks and auditing firms should be the first-line defence against money laundering as they have the information that law enforcement agencies do not. 


"The point is they have access to client data that regulators do not have. They are best placed to monitor and report illicit financial activity. They should be doing the jobs that regulators and law enforcement cannot do. They should be the first line of defence,” Hain said. 


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