SA cannot rest on its laurels now that it has exited greylisting, deputy finance minister David Masondo has warned.
The greylisting was imposed by the Financial Action Task Force (FATF) in February 2023 and lifted at the global watchdog’s plenary in Paris last week.
The FATF sets standards for governments to implement to combat money-laundering and the financing of terrorism. It found after evaluating SA’s regime that it was deficient.
In his concluding remarks at a meeting of parliament’s finance committee on Wednesday, Masondo cautioned that SA had to maintain its standards and could not rest on its laurels.
“In two years’ time the FATF will have to give us results again on whether there are legislative gaps in our laws to combat terrorism financing and money-laundering and financial crimes in general, and whether our institutions are effective in combating them,” the deputy minister said.
He said the criminal justice system had to deal decisively with financial crimes, initially identified by the FATF as one of the weaknesses in SA’s system.
“To maintain this status of being off of the greylist is not a permanent thing. It is something that is continuously earned.
“We are continuously evaluated by FATF, and if we are found wanting, there are huge implications insofar as SA being competitive as a destination for investors.
“Investors should trust our financial institutions and trust that when money is put into SA for economic growth, it will be effectively used.”
To maintain this status of being off of the greylist is not a permanent thing. It is something that is continuously earned.
— David Masondo, deputy finance minister.
The National Treasury said in a media statement after the FATF announcement on Friday that the FATF requires countries that have exited the greylist to demonstrate continued commitment through measurable outcomes, including successful investigations, prosecutions and sanctions as they relate to anti-money-laundering and combating the financing of terrorism.
It said that the FATF’s next mutual evaluation would assess SA’s actions in this regard. This was expected to start in the first half of 2026 and conclude in October 2027.
“To prevent being placed back on the greylist, it is important that systems of monitoring and enforcement work more efficiently and effectively and that there are no gaps by the time of the mutual evaluation.
“Preparations, in this regard, have already begun, and we remain confident SA will be able to sustain the progress made,” the statement said.
Treasury added that exiting the greylist was only the start of a process of continuing to strengthen key institutions, improve enforcement and governance processes, and ensure that such improvements were sustainable. “Neither government agencies nor regulated entities in the private sector can afford to become complacent and stop improving.”
Pieter Smit, the director of the Financial Intelligence Centre (FIC), which monitors money-laundering, terrorism financing and other suspicious transactions, said in his presentation to the committee that possible amendments to legislation, including the Non-Profit Organisation Act, Companies Act, Trust Property Control Act, Prevention of Organised Crime Act and the FIC Act, might be necessary to strengthen SA’s regime.
He noted that SA had adopted a risk-based approach to combating money-laundering and terrorist financing and that the government was in the process of completing the first cycle of risk assessment at a national and sectoral level. This would inform future policymaking and resource allocation.
Key findings
One assessment on money-laundering and another on terror financing had been completed.
Key findings of the risk assessment process were that SA was a major financial centre on the African continent and the largest in Sub-Saharan Africa. It was a conduit for funds going into the region and coming from the region and moving to the major financial centres around the world.
“This requires us to be very vigilant about financial flows in and out of the country and within our financial institutions,” Smit said.
The assessment also found that the banks had more mature measures to mitigate money-laundering and terrorist financing risks than non-financial institutions and that the “prevalence of cash allows for anonymity and ease of flow of funds, while contributing to the masking of illicit activity”.
Corruption and bribery remained a challenge, and there was a misuse of corporate vehicles such as companies and trusts, which were used as a front by individuals when they engaged with financial institutions to obscure their own involvement in the transaction. Smit said partnerships with businesses and authorities were necessary to ensure an adequate flow of necessary information.
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