Africa-Press – South-Sudan. A member of parliament has called on the transitional government’s Financial Intelligence Unit (FIU) to lead by example in implementing a new directive for compulsory use of licensed banking in transactions to combat money laundering.
On May 6, the FIU issued a mandatory directive for the public and business entities to deposit the bulk of South Sudan pounds in their possession to licensed banks and to conduct transactions through licensed financial institutions.
The directive cited sections of the Anti-Money Laundering and Counter-Terrorist Financing Act, 2012, which empowers the agency to criminalize possession of illicit bulk cash and reporting large-cash transactions.
FIU Commissioner Abraham Telar warned that the bulk of SSP found outside the banking institution will be seized by security forces, after which authorities will investigate the source of the funds, tax compliance and potential money-laundering or terrorist-financing offences.
Possession of illicit bulk cash is punishable by imprisonment of up to 10 years for individuals or a fine up to three times the value of the seized money for corporate entities in addition to sanctions imposed by the court.
Reacting to the order, Hon. Gai Mayen Luk, a member of the Transitional National Legislative Assembly, said the order issued by the FIU will remain ineffective unless government officials first demonstrate transparency in handling public funds.
He expressed scepticism over the practicality and effectiveness of the directive, citing past failures in the implementation of similar orders.
“Our government officials are not leading by example from the top level. So this is what is causing the financial outflow. Our money does not keep in circulation. It is taken out, and that’s why you see a shortage of cash most of the time,” he said.
“About 98 per cent of our revenues as a country come from the oil, but that money goes out as soon as it comes. It does not circulate within the economy, so the government has to lead by example.”
“It’s not just a matter of issuing directives and intimidating people. The system has not been fixed; the system has to be fixed. There has to be appropriate management of our resources, and the public and the foreigners will toe the line.”
Hon. Mayen criticized high-ranking officials for having allegedly swindled public funds abroad, a situation he blames for the chronic shortage of cash in the local economy.
He recalled previous instructions from the Bank of South Sudan, urging citizens to keep money in banks and prohibiting the use of foreign currencies such as the U.S. dollar in local transactions, but which were not effectively implemented.
Hon. Mayen attributed the ineffectiveness of such policies to a broader lack of public confidence in the financial system. He pointed to hyperinflation as a major factor discouraging people from depositing money in banks.
“Our economy is faced with ever-rising inflation, and that which makes it difficult for business entities and even individuals to keep their money in the banks because let’s say for example, today you deposit your 100,000 SSP in the bank and you want to get it back one week later to use it, you find that the value of that money has depreciated.”
“So that is the reason why people do not keep their money in the banks especially our local currency because it keeps on depreciating it keeps on losing value and if you save it in the bank you don’t get the value for your money by the time you get it back it has hopelessly lost a lot of value.”
The MP also raised concerns about the banking sector’s limited support for ordinary citizens.
Hon. Gai further stated the impact of political instability on financial behavior, criticizing the government officials for not leading by example, accusing some of taking public funds abroad.
Hon. Gai warned that issuing directives without addressing systemic flaws will not yield results.
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