Even though SA faces the risk of being greylisted by the global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF), in February next year — joining the ranks of nations deemed to have inadequate protections — credit agency Fitch Ratings says the move is unlikely to change the country’s rating or ratings outlook.
“Judging by the fact of greylisting in other sovereigns [...] from our perspective, [it] will be quite unlikely that such a greylisting will have an impact that is sufficient to change the rating, or even the outlook on SA’s rating,” the head of the Middle East and Africa sovereign ratings team at Fitch, Jan Friederich, said last week at the Nedgroup investment treasurers’ conference.
“In any case, government has taken measures to avoid greylisting and so we would assume that greylisting, even if it were to occur, would be of a limited duration,” Friederich added.
Speaking at the conference, Nedbank’s head of anti-money laundering, counter-financing of terrorism and sanctions, Ofentse Theledi, said if greylisting were to materialise, SA would be classified high risk by its trading partners, face potential de-investment and see increased monitoring by the FATF.
“What this means for us from a banking perspective as a whole is that the relationships we have with some of the corresponding banks would have increased monitoring. Similar to what we saw when Mauritius was greylisted.
“We will see possible restrictions on banks in the US, UK and EU from transacting with SA banks. Access to trade, finance and investment would face adverse consequences and the ease of business will suffer,” Theledi said.
The Reserve Bank said it is confident it and the Prudential Authority could demonstrate significant progress and compliance by the end of the year, ahead of the FATF’s decision on whether to greylist SA.
However, the Bank said its workings do not cover deficiencies in law enforcement and prosecutions identified by the FATF. “Changes need to be made across the government if SA is to avoid being greylisted,” the Bank said.
Theledi said to avoid possible greylisting a number of the country’s laws to counter money laundering will need to undergo extensive review, adding that the National Treasury has now spearheaded an omnibus bill intended to address deficiencies and making amendments to the Financial Intelligence Centre Act, the Financial Transactions Reporting Act and others.
He said there is quite a bit of work that needs to be done to ensure the country is able to demonstrate that it pursues money laundering and terrorist financing cases from a law enforcement perspective beyond banks submitting information as required by the Financial Transactions Reporting Act.
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