Crackdown on illicit slot machines in Limpopo taverns sparked by warning about link to international crime

A team of law enforcement officers raided spaza shops and taverns in Lulekani village near Phalaborwa as part of a campaign to ensure compliance with various by-laws and national laws governing the running of such businesses. Several operators were fined for selling expired goods, failing to produce the required permits and not adhering to regulations governing the construction and structural make up of their business premises. Photo: Lucas Ledwaba

By Lucas Ledwaba

9 May 2023

Limpopo authorities are raiding taverns and spaza shops across the province in a crackdown on illegal gambling. This follows warnings about money laundering and terrorist financing.

It’s not even lunchtime on a Saturday but already patrons at a tavern in Matiko Xikaya, a rural village in Limpopo, are trying their luck on a number of slot machines mounted on the walls.

The joint is not packed, but one of the men playing the machines says it usually is “full of people all day”, especially on weekends.

The slots are in a room partitioned from the main boozing area – as stipulated in regulations governing such establishments. The entrance to the mini casino overlooks a pool and a TV room, where two other patrons are watching the telly.

Police, together with Department of Home Affairs and Limpopo Gambling Board officials, are raiding the establishment as part of a drive to ensure compliance with laws and to root out illegal operators.

Although the tavern in Matiko Xikaya was found to be compliant, the provincial government is worried about the rapid increase in the number of illegal slot machines in rural areas.

And though patrons at illegal casinos may be innocent gamblers, they could be unknowingly aiding international money laundering and terrorist financing schemes.

Read more in Daily Maverick: Young South Africans gamble with their lives in miserable web of online betting

In a recent provincial budget vote speech, MEC for Limpopo Economic Development, Environment and Tourism (Ledet) Rogers Monama noted that “the province unfortunately is experiencing widespread illegal gambling machines, usually found at foreign-owned local spaza shops in rural areas”.

Monama said that “for now government does not know who is the supplier of these machines to spaza shops”.

This comes shortly after South Africa was blacklisted by the Financial Action Task Force for, among other things, having weak systems to fight money laundering and terrorism financing.

Monama said the Limpopo Gambling Board had partnered with the Financial Intelligence Centre (FIC) “to tighten the belt within the gambling industry”.

The FIC is a statutory body tasked with, among other things, combating money laundering and terror financing.

Read more in Daily Maverick: Who stands to become an ‘accountable institution’ under amended Fica legislation?

“South Africa is prone to opportunistic chances of illicit financial flows, money laundering and terrorist financing.”

Monama said the partnership with the FIC would focus on monitoring gambling and on implementing risk-based methodologies to fight illegal money flows.

A team of law enforcement officers raided spaza shops and taverns in Lulekani village near Phalaborwa as part of a campaign to ensure compliance with by-laws and national laws governing the running of such businesses. Several operators were fined for selling expired goods, failing to produce the required permits and not adhering to regulations governing the construction and structural make-up of their business premises. (Photo: Lucas Ledwaba)

Last month, the FIC announced the establishment of the State Forensic Capability (SFC), saying that it would “assist in dealing with an increase in complex money laundering matters that the police refer to the FIC, and do more than only conduct analysis”.

“As a result of South Africa being greylisted, and as part of the Financial Action Task Force action plan, the police are expected to send more requests to the FIC for financial intelligence,” it said.

“The SFC unit will be able to produce forensic reports that law enforcement agencies can use in complex money laundering cases.”

The Limpopo Gambling Board revealed in its 2021/22 annual report that 25 illegal gambling operators were arrested during investigations, and admission of guilt fines amounting to R29,500 were paid at various police stations around Limpopo during that financial year.

Items seized as part of raids on spaza shops and taverns in Lulekani village near Phalaborwa. (Photo: Lucas Ledwaba)

The board said 59 cases were investigated during the same financial year and that these investigations had resulted in the confiscation of 116 illegal gambling machines, such as Chinese Roulette, from various spaza shops and taverns throughout the province.

The board also noted that 57 illegal gambling machines were destroyed during the same period and that a further 59 would be destroyed during the current financial year.

Warning

The FIC issued a dire warning in a report titled “Assessment of the inherent money laundering and terrorist financing risks”, published in March 2022.

It said: “The gambling sector has been identified by the international anti-money laundering community as being potentially vulnerable to being abused for money laundering purposes.”

A law enforcement officer during one of the raids on spaza shops and taverns in Lulekani village near Phalaborwa. (Photo: Lucas Ledwaba)

The report further noted that “terrorist financing is the process by which individual terrorists and terrorist organisations obtain funds to commit acts of terrorism” and that “casinos face growing competition from other gambling modes, including illegal online gambling and illegal land-based casinos”.

Global policing agency Interpol has said: “Illegal gambling generates significant profits for organised crime networks and is often closely associated with other crimes such as money laundering and corruption.”

The FIC says the magnitude of illegal gambling is not known but it is estimated to be costing the South African economy more than R10-million a year. Mukurukuru Media/DM168

At the time of publication we were still waiting for comment from the Limpopo SAPS.

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R29.

Categories:

Tags:

DM is much better if you are signed in...

Business Maverick

Warning