The suspects are Malawian nationals, aged between 18 and 28, and two Chinese nationals.

The arrests were effected in collaboration with the Newcastle Local Criminal Record Centre, the Illicit Mining Unit, Digital Forensic Investigation (DFI) KZN and the Immigration Office on Monday.

The joint operation followed a tip-off about potential human trafficking activity at the Northern Truck Stop in Newcastle on 14 January 2025.

The investigating team obtained a search warrant from the Newcastle Magistrate Court and initiated the operation on Monday.

During the search, the law enforcement agencies uncovered 22 Malawian and two Chinese suspects on the premises.

It was established that the suspects were manufacturing SIM cards in violation of the Regulation of Interception of Communications and Provision of Communication–Related Information Act (RICA).

A total of 24 suspects, including the two Chinese nationals, Zhang Shengatao and Liu Gou, were apprehended for contravening the Immigration Act.

On Wednesday, Zhang and Liu appeared before the Newcastle Magistrate Court for violation of the RICA Act. The case was postponed to 6 February 2025 for formal bail application.

The KwaZulu-Natal Directorate for Priority Crime Investigation Provincial Head, Major General Dr Lesetja Senona commended the Hawks members for the arrests.

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In 2021, the Constitutional Court ordered parliament to make changes to the law so that it balances the right of authorities to intercept suspected criminal communication with the right to privacy. The Constitutional Court confirmed an earlier declaration by the high court that RICA is unconstitutional, to the extent that it fails to provide adequate safeguards to protect the rights as envisaged in the Bill of Rights, such as the right to privacy, as buttressed by the rights of access to courts, freedom of expression and the media, and legal privilege.

For example, in most cases subjects of surveillance must learn that they were under surveillance when the operation is complete.

The sixth parliament proposed amendments to protect citizens, but the president is concerned they are not robust enough to pass constitutional muster and has asked the seventh parliament to further remedy these deficiencies.

But RICA, a complex piece of legislation which covers criminal law, SIM card regulation, communications law and privacy rights, requires an entire overhaul above and beyond just the surveillance aspects, in order to bring it up to date.

The Department of Justice received multiple submissions on updating the bill in 2023.

SIM cards registration is currently governed by RICA and the act requires consumers to register their SIM cards, used in mobile phones and for financial transactions, by linking them to their name and identity number.

But in reality, many SIM cards are sold pre RICA’ed by the distributors, who use a loophole in the current law to bypass the legal requirements with ease. This makes transferring money with a phone and communication possibly anonymously,

A key challenge in this context is Section 40 of RICA, which allows registered SIM holders, who are designated customers, to transfer their SIM cards to other people. While this provision lets, for instance, a spouse or parent register a SIM card on behalf of their partner or child, it also enables large SIM distributors—technically telecom customers themselves—to buy SIM cards in bulk, register them, and resell them to end-users, thus devaluing the RICA provisions.

Often, third-party distributors, use their designation as customers to register SIM cards but misregister these SIM cards with generic company names or incorrect ID numbers, while doing so in bulk.

Legally, the responsibility to update the information lies with the consumer, yet this step is often overlooked by end-users, resulting in tens of millions of SIM cards being incorrectly registered. This leaves telecoms firms, government agencies and departments struggling to identify who actually holds each SIM card.

Estimates suggest that of the 100 million prepaid SIM cards distributed annually, the majority are incorrectly registered, complicating efforts to trace individuals responsible for specific financial transactions or suspect communications.

Several potential reforms could strengthen SIM security. One approach is to introduce tamper-proof packaging, which would make it harder for third-party distributors to pre-register SIM cards under false IDs or generic corporate names. This packaging could protect each SIM card’s unique identifying numbers, helping prevent bulk registrations and possible cloning of cards.

Another possible reform would hold distributors and telecom providers more accountable for ensuring consumer information accuracy, rather than placing the burden solely on end-users.

Finally, linking SIM card registrations to Home Affairs’ ID verification system could greatly improve security. While bank cards are connected to verified ID numbers, many SIM cards are currently registered to number strings that mimic the 13-digit length of ID numbers, made up random numbers but aren’t verified as authentic. Integrating Home Affairs’ database could help ensure that SIM cards are registered to legitimate, verified users, significantly reducing the risk of misuse.

The validation process could be performed over time, with a grace period allowed for customer details to be synced with a home affairs database.

As mobile phones and SIMs are increasingly used in financial services to apply for loans, buy airtime, purchase insurance, and transfer money to bank accounts or across borders, there needs to be better security around SIM cards.

Just as banks adhere to strict know-your-customer (KYC) legislation, mobile firms should implement stricter regulations to ensure proper identification of SIM card users who access financial services.

Written by Farhad Khan, Telecommunications Consultant.

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Mobile phone operators are increasingly moving into FinTech, or financial services, allowing users to transfer money from their phones, apply for loans or buy insurance and funeral policies. 

So as mobile services act more and more like banks, they may need to adhere to similar safety standards as banks. In fact, this may be essential as South Africa works to remove itself from anti-terror financing watchdog Financial Action Task Force’s (FATF) grey list and prove to the world it has controls in place to prevent money laundering and terrorism financing.

Even as mobile phones are used for banking, banks must adhere to stricter legislation such as the Financial Intelligence Centre Act (FICA), that expects them to know their customer, described by the well-known acronym KYC.

In South Africa there is a problem where some SIM cards are not properly registered. Each year a whopping 150-million SIM cards are distributed, more than two per adult in the country, many unpackaged with identifying numbers visible. They do not all get RICA-ed, that is linked to a specific individual with an identity document and address.

But even without a SIM card being RICA-ed, it appears users can at times send money across borders throughout Africa, while using SIM cards to register with money remittance services.

An investigation published in the Sunday Times late last year reported that between 2020 and March 2021 users sent through R6.3bn sent from 56,967 unregistered sim cards through a money transfer service to Sudan, Nigeria and Kenya. Some of these funds were believed to be linked to the Islamic State of Iraq and Syria (ISIS) terror financing.

The senders used cell phone numbers that had not been subject to a valid RICA process to register as clients at a money remittance service. Critically, RICA requires that cell numbers are verified by the telecommunication providers, but does not require by remittance services to ensure cards are RICA-ed. This loophole allowed money to be sent from unknown senders.

The FATF, which aims to prevent money laundering and illicit financial flows, notes in its documents, that when money is transferred from unknown senders the risks of money laundering or financing terrorism are increased. 

The FATF wants countries to balance the need for financial controls to prevent untraceable cross-border transfers against the need to ensure the controls are not so stringent that they block the unbanked from access to financial services. 

Notwithstanding, the need to expand access to mobile banking services, some African countries are clamping down on unregistered SIM cards. Nigeria and Namibia and Kenya have already done so. 

In March 2024, Nigeria ordered telephone communication companies to block and disconnect users who have not linked a national identity number to a SIM card.  Nigeria has been working for years to stop the use of unverified sim cards for years to reduce fraud, extortion, kidnappings and terrorism. Namibia required telecommunications operators to suspend all unregistered SIM cards by the end of March.

South Africa, as it aims to escape the grey list, could follow suit and begin to clamp on the ease of access to unregistered SIM cards. There is evidence that unregistered SIM cards can increase illicit financial flows making it hard to trace where cross border transfers have originated from.

It is time to ensure better enforcement of RICA provisions and stop the proliferation of unregistered SIM cards as part of the effort to intensify our fight against crime.

Siphelele Khanyile is the managing executive at Securi-Tech SA, the country’s largest producer of airtime vouchers.

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