Another round of Financial Action Task Force (FATF) assessments has rolled through Paris, with SA managing to secure a few more ticks on the checklist of anti-money-laundering and counter-terrorist financing compliance — nine upgrades, to be precise.
But let’s not pop open the bubbly just yet. We still have six more hurdles to clear before we can shake off the economically damaging greylisting label, and as the Treasury’s latest statement suggests, it’s going to be a race against time. With the February 2025 finish line fast approaching, the question is: will SA rise to the challenge or will we trip on our own shoelaces once again?
To recap, SA finds itself on the FATF greylist due to an abysmal track record in combating money-laundering and terrorist financing. The Treasury and its merry band of regulators have made strides, as illustrated by the FATF’s recognition of progress in everything from increased outbound mutual legal assistance (MLA) requests to better targeted financial sanctions.
The trouble is, when you’re in a relay race even a promising start can unravel if the baton drops at the crucial moment. Right now, the remaining six action items feel like those last 100m — everyone’s exhausted, but a strong finish is the only option if we want to be invited back to the big leagues.
Let’s zoom in on those final six areas. Three relate to the need for a “sustained increase” in the investigation and prosecution of complex money-laundering cases, terror financing and the shady dealings of unlicensed cross-border money or value transfer services. The key word here is “sustained”. The FATF aren’t fools. A quick flurry of activity just before the February review isn’t going to cut it. They want to see that we can maintain the pace, that we’ve got more than just a burst of energy to prosecute these crimes.
The other three action items focus on ensuring timely access to accurate beneficial ownership information — a fancy term for making sure we know who’s really behind those shell companies. This part has always been a bit like playing a game of whack-a-mole. One registry gets cleaned up and another dodgy structure pops up somewhere else.
As the FATF noted, SA’s beneficial ownership registries are “out of date” because coverage was “too low” by September 2024. The push is now on for companies and trusts to get their houses in order by November 30, but given how many SA firms treat deadlines as mere suggestions, this could be a photo finish.
The Treasury’s plan includes the usual reassurances of interdepartmental committees and co-ordinated action. There’s talk of more training, better oversight and, of course, increased resources for the regulators. But we’ve been here before. Anyone who remembers the National Prosecuting Authority’s spectacular failures post-Zondo commission knows that high-level promises often falter when they reach ground level. The complex cases stall, prosecutions dwindle and the momentum fades. The FATF wants to see more than just good intentions; it wants to see convictions.
While the Treasury rallies its interdepartmental committees we can’t ignore the taproot of this crisis. The ANC admitted in its national executive committee (NEC) meeting this weekend that its own structures are being held “hostage” by corrupt elements. Cyril Ramaphosa’s ANC is struggling to clean house, hamstrung by its own internal battles. One can only arrive at the conclusion that the president pays lip service to the fight given that his justice minister is under the VBS Mutual Bank corruption cloud.
Meanwhile, despite being accused of mismanagement, fraud, corruption and irregular spending, Shoki Tshabalala, former head of the Gauteng department of social development, has been rewarded with a job at the presidency as deputy director-general at the department of women, youth & persons with disability. Just one more instance of how officials involved in corruption are protected by cadre deployment.
With the ANC unable to sever the umbilical cord of corruption, it’s no wonder the FATF remains unconvinced about SA’s commitment to clean governance. The NEC’s own documents lament that “state investigative units and prosecutorial authorities appear to be weakened and affected by factional battles.” This isn’t exactly the picture of a country ready to exit the greylist.
The urgency couldn’t be clearer and yet reading through the Treasury’s statement you get the sense of a familiar SA story, where we’re almost there but somehow still lagging. While the Financial Sector Conduct Authority and SA Revenue Service have been flexing their enforcement muscles, where is the National Prosecuting Authority? As I’ve asked before, how is it that an accused Isis financier can slip through the cracks while law-abiding corporates face the full might of regulatory action for any compliance misstep? It’s almost as if prosecuting actual criminals is a bridge too far.
Remaining on the greylist means higher costs of doing business, slower capital inflows and a prolonged drag on economic recovery. The longer we stay on the greylist, the harder it will be to reverse the damage. So, what’s it going to be? Do we have the resolve to push through these last hurdles, or are we content to keep stumbling? The Treasury’s latest statement makes clear that if we don’t get our act together the best-case scenario moves from June to October next year — or worse, further down the line. That’s time we don’t have, especially with global investors still looking on from the sidelines.
If we don’t wrap up the remaining deficiencies we risk missing the broader opportunity to prove that SA is, at last, a place where the rule of law is more than just a marketing slogan at investor conferences.
• Avery, a financial journalist and broadcaster, produces BDTV's Business Watch. Contact him at Badger@businesslive.co.za.
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