The Financial Action Task Force (FATF) has credited SA with “substantially” completing all 22 items on the action list that it was required to address after the international body greylisted it in February 2023 because of weaknesses in the country’s regime to combat money laundering and terror financing.
The completion of the 22 actions in the action plan paves the way for an on-site visit by the FATF Africa Joint Group. If the outcome is positive this would be the final step before the greylisting is lifted in October.
Greylisting has an effect on the cost of doing business, particularly cross-border business, because of the higher compliance requirements that bankers and other financial market players impose on SA as a result.
While some countries have taken swift action that has enabled them to exit the FATF greylist within one to three years, some have stayed on the list for much longer.
Market players said the longer a country is on the list, the worse the effect is on its relationships with counterparties and correspondent banks, who impose more stringent due diligence requirements.
The government and its agencies have been hard at work over the past two years to address the weaknesses highlighted by the FATF,including legislation to close loopholes, such as the lack of beneficial ownership regulations.
Slow progress
SA’s slow progress on prosecuting priority crimes, particularly those related to state capture, was one of the last hurdles to getting off the greylist. The umbrella body Business for SA has been assisting law enforcement authorities with resources and expertise to pursue 20 priority crimes.
The FATF said SA’s progress warranted this on-site assessment to verify that critical anti-money-laundering and the combating of the financing of terrorism reforms have been implemented, and that the necessary political commitment remains in place to sustain progress.
In a statement, the National Treasury said it was the efforts and commitment of the law enforcement entities — especially the Hawks, police, the State Security Agency and the National Prosecuting Authority — that were responsible “for the sustained increase in investigations and prosecutions of serious and complex money laundering and terror financing activities”.
Exiting the FATF greylist is a significant step forward as SA continues to improve and strengthen its supervisory and criminal justice systems.
— The National Treasury
“This made it possible for SA to secure the upgrades of the last two remaining action items, often considered to be the most difficult, in the current reporting cycle. This was recognised by the FATF,” the statement said.
Critical improvements
The National Treasury said the improvements to SA’s anti-money-laundering and the combating of the financing of terrorism regime were particularly important given the legacy of state capture, one element of which was that law enforcement and prosecuting institutions were deliberately weakened.
“Improvements in these domains are critical not just for getting off the greylist, but for strengthening the fight against crime and corruption, and for contributing to the integrity of the SA financial system.
“Exiting the FATF greylist is a significant step forward as SA continues to improve and strengthen its supervisory and criminal justice systems,” it said.
The National Treasury said preparations for the on-site visit had started.
The FATF lifted the greylisting of Mali, Tanzania, Nigeria, Mozambique and Burkina Faso, which, like SA, were deemed to have substantially completed their action plans, and for whom on-site assessments were also approved.
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