SA has been removed from the greylist of countries that don’t meet global standards for the combatting of money laundering and terrorism financing.
The announcement was made late Friday afternoon by the Financial Action Task Force (FATF) — the international watchdog that sets global standards and evaluates compliance — at the conclusion of its plenary in Paris.
FATF president Elisa de Anda Madrazo announced SA’s removal from the greylist at a media briefing, saying the country had sharpened its tools against money laundering and financing of terrorism.
Also removed from FATF’s increased monitoring list were:
- Burkina Faso
- Mozambique
- Nigeria
De Anda Madrazo noted the commitment by the South African authorities “at the highest level” in complying with FATF requirements. She said the country was in a better place now with stronger institutions.
The FATF report said SA had made “significant progress in improving its AML/CFT (anti-money laundering/combating the financing of terrorism) regime”.
Hard-won reform drive
The lifting of the stigma comes after a two-and-a-half-year drive by the government and its institutions to implement a 22-point action plan agreed with the FATF after SA was greylisted in February 2023.
Treasury technical adviser and head of SA’s delegation to the FATF Ismail Momoniat played an important role in this effort.
- SA’s exit from the FATF greylist restores global financial credibility.
- It eases cross-border business and boosts investor confidence.
- Signals progress in tackling financial crime and strengthening institutions.
SA’s international reputation as a well-regulated financial and economic centre was damaged by the greylisting, which dented investor confidence, resulted in heightened due diligence, especially in the financial sector, added to the cost of doing business and made cross-border correspondent banking relationships more onerous.
Business For SA welcomed the lifting of the greylisting in a statement.
SA’s compliance gains
The FATF said SA has strengthened oversight of designated non-financial businesses and professions, applying sanctions for noncompliance.
Authorities now have timely access to accurate, up-to-date information on the beneficial ownership of companies and trusts. Law enforcement agencies have also shown a steady increase in requests for financial intelligence from the Financial Intelligence Centre to support money laundering and terrorism financing investigations.
SA has boosted investigations and prosecutions of serious and complex money laundering and terrorism financing cases. The country has also improved the identification, seizure, and confiscation of criminal proceeds.
Markets saw it coming
Earlier this week, Prescient Investment Management chief investment officer Bastian Teichgreeber said the markets — which were always forward-looking and sentiment-driven— had already priced in a lifting of the greylisting, though he cautioned greylisting was a very small factor driving them.
The June FATF plenary noted the progress SA had made in meeting FATF requirements, saying it had substantially completed all 22 actions of the action plan.
FATF decided this progress warranted an onsite assessment by the FATF Africa joint group to verify that the anti-money laundering and combatting the financing of terrorism reforms had been implemented.
It also wanted to assess whether the necessary political commitment remained in place to sustain the progress made. The government assured an FATF delegation earlier this year of its political commitment to continue improving SA’s regime.
From failures to fixes
SA did not manage to satisfy FATF at its February plenary largely due to the lack of successful prosecutions of high-profile cases, but National Treasury was confident at the time that SA would exit the greylist this month. There were only two outstanding items which FATF said had been partly but not fully addressed.
The greylisting galvanised the government to address the compliance deficiencies. Multi-agency task teams were set up to address the FATF findings, an action plan was drawn up, laws were amended, supervision tightened and greater focus given to the prosecution of money-laundering and terrorism financing cases.
The law regarding the identification and tracking of the beneficial ownership of companies and trusts was tightened, and the supervision of designated non-financial businesses and professions, such as estate agents and lawyers, was strengthened.
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