The Treasury says it remains confident SA will exit the Financial Action Task Force’s (FATF) money-laundering greylist by October, after the organisation said only two items on their jointly agreed plan still need to be addressed.
The Paris-based financial crime watchdog sets international standards for global compliance with anti-money-laundering and antiterrorist financing rules. It puts countries on its greylist to signal they are under increased monitoring but working to address the problems that have been identified. Countries that do not co-operate with the FATF are placed on a blacklist.
SA needs to show a “sustained increase in investigations and prosecutions of serious and complex money-laundering and the full range of terrorist financing activities in line with its risk profile” by June, the FATF said, referring to its next plenary meeting. The next opportunity to exit the greylist is in October.
SA was greylisted by the FATF in February 2023 for failing to comply with international standards for preventing money-laundering and terrorist financing. The two parties agreed on an action plan that set out a list of 22 flaws in SA’s financial system that needed improvement.
Being greylisted dents a country’s reputation and raises transaction costs as it increases the due diligence required to meet FATF requirements. Countries try to get off the list as quickly as possible. Mauritius exited the list in less than two years, but the Philippines, which made the grade on Friday, took nearly four years to do so.
The Treasury had initially hoped to get off the greylist by early 2025, but deputy finance minister David Masondo warned investors in October that SA still needed another year to do so, despite rapid progress that had been made in enacting legislative and regulatory reforms to address its compliance gaps. At that stage SA had addressed 16 of the 22 items on the action plan’s list.
Treasury adviser Ismail Momoniat, who heads SA’s delegation to the global watchdog, said he was optimistic SA would exit the greylist by October. SA was making good progress on the two outstanding items, which had previously been upgraded from “not addressed” to “partly addressed”, he said. “They were always going to be the most difficult as they represent the end point of the action plan. It’s not unexpected that they will be the last,” he said in an interview on Sunday.
Investigation strategy
The Treasury said SA’s investigation and prosecution agencies were working closely on a prosecution-guided investigation strategy to ensure SA could demonstrate the sustained progress required by FATF. “These improvements are critical not just for getting off the greylist, but, critically, for strengthening the fight against crime and corruption,” it said.
A partnership between business and the government that aims to tackle the energy, logistics and crime crises dragging on economic growth has made this one of its focus areas. Business partnered with the Hawks to set up a specialised forensics laboratory to speed up the prosecutions of 20 priority crimes involving money-laundering.
The FATF said SA had made progress in ensuring authorities had timely access to accurate beneficial ownership information, and in applying sanctions to breaches or violations of beneficial ownership obligations.
Beneficial ownership refers to the individuals who ultimately own or control a company or large entity.
Corruption Watch executive director Karam Singh said exiting the greylist would boost investor confidence, but would not immediately translate into benefits for citizens.
SA is one of 14 African countries on the FATF greylist, which includes Angola, Algeria, Burkina Faso, Cameroon, Ivory Coast, the Democratic Republic of Congo, Kenya, Mali, Mozambique, Namibia, Nigeria, South Sudan and Tanzania. No other country that belongs to Brics — the 10-member intergovernmental organisation that positions itself as an alternative to the Group of Seven — is on the list.
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