Foreign-owned spaza shops linked to R6.3 billion, illicit financial flow in South Africa
A new report suggests that foreign-owned spaza shops in South Africa are being used to facilitate billions in illicit financial flows. These unmonitored networks are allegedly linked to money laundering and the funding of terrorist groups.
Why it matters
The findings highlight significant gaps in financial regulation and the potential for informal economies to be exploited for transnational criminal activity.
Ask AI 5 min The report exposes how informal businesses are being used for hidden financial flows.
Image: Oupa Mokoena / Independent Newspapers
Foreign-owned spaza shops are allegedly being used as channels for illicit financial activities in South Africa.
This is according to the report titled “The Nature of Stealthy Remittance in South Africa” (Insights from SADC immigrants operating in Tshwane’s informal economy), which revealed that an estimated R6.3 billion generated by these spaza shops was illegally moved out of the country.
The money is being transferred through unregistered SIM cards and informal cash networks.
These unmonitored money flows contributed to South Africa’s grey listing due to poor systems for tracking money laundering and terrorist financing.
The funds reportedly reached terrorist cells, including Islamic State (IS) affiliates, operating across Kenya, Somalia, Nigeria and Mozambique.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in