SA’s investigating and prosecuting authorities need to demonstrate that money-laundering and terrorism financing cases are being conducted on a sustained basis if SA is to exit the greylisting imposed by the Financial Action Task Force (FATF).
This will be the toughest of the six outstanding actions that SA will have to finalise by February if greylisting is to be removed by June next year. If it fails to do so, the next possible exit from greylisting will be in October next year.
The FATF, a Paris-based global organisation which sets standards for regimes to combat money laundering and terrorism financing, wants to see a sustained increase in investigations and prosecutions. SA was placed on the FATF greylist early in 2023 because of the deficiencies in its regime.
The FATF plenary held in Paris, France last week noted the progress SA had made in addressing these deficiencies but said that the country “should demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering (cases), in particular involving professional money laundering networks/enablers and third-party money-launderers in line with its risk profile.
“SA should demonstrate a sustained increase in the effective identification, investigation and prosecution of the full range of terrorism financing activities, consistent with its terrorism financing risk profile.”
Another area of work for the authorities is to increase the number of registrations of beneficial ownership by companies and trusts which is another requirement of FATF. Treasury technical adviser and head of SA’s FATF delegation Ismail Momoniat said in an interview on Sunday that the pace of registration had been slow.
The National Treasury called on all companies and professional trustee service providers to ensure registration by companies and trusts they engage (or are involved) with before end-November 2024 “to significantly increase the coverage in beneficial ownership registries”.
FATF’s statement after the plenary said SA had to ensure “that competent authorities have timely access to accurate and up-to-date beneficial ownership information on legal persons and arrangements and apply sanctions for breaches of violation by legal persons to beneficial ownership obligations”.
FATF said SA should continue to work on implementing its action plan to address its remaining strategic deficiencies, including by demonstrating that all anti-money laundering/combating the financing of terrorism supervisors apply effective, proportionate, and effective sanctions for noncompliance.
“SA is now deemed to largely or fully address 16 of the 22 action items in its action plan, leaving the country with six outstanding action items to be addressed for the last scheduled reporting cycle, concluding in February 2025,” the Treasury said in a statement. All 22 items have to be addressed for the greylisting to be lifted.
SA has also met 37 of the 40 FATF standards, one of which does not apply to the country.
SA should demonstrate a sustained increase in the effective identification, investigation and prosecution of the full range of terrorism financing activities, consistent with its terrorism financing risk profile.
“The fact that SA complies with 37 of 39 applicable recommendations places it in a good position for the next 2026/27 mutual evaluation assessment,” the Treasury said. It noted that further legislation would be introduced next year to address FATF’s concerns.
Treasury welcomed the progress made by all agencies in this achievement but cautioned that it remained a “difficult challenge” to address all outstanding action items by February 2025.
The Treasury said SA was now left with one reporting cycle to address the remaining six action items.
“If SA is successful in addressing all remaining action items in the next reporting cycle, the February 2025 FATF plenary will authorise an on-site visit by the FATF Africa joint group to confirm their assessment on the progress of all action items. This would happen around May 2025,” the Treasury said.
If the on-site assessment results in a positive outcome, the FATF Africa joint group will recommend to the June 2025 FATF plenary that SA be delisted from the FATF greylist.
However, if the joint group assessed that SA has not adequately addressed all remaining action items in February 2025, SA will be required to continue reporting back to the joint group every four months until all the action items have been addressed. Hence the exit from greylisting will be moved from June 2025 to October 2025, or later.
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