South Africa still stuck on the grey list after latest review

South Africa still stuck on the grey list after latest review

South Africa is still on the Financial Action Task Force’s (FATF) grey list, but there are hopes that it will be removed by 2025.

In February last year, South Africa was placed on the FATF’s grey list for failing to tackle illicit financial flows, such as terror financing and money laundering.

The move raised the costs for banks and asset managers in South Africa.

Despite not getting off the grey list, the FATF did commend South Africa for its high-level political commitment to work on anti-money laundering and counter-financing of terrorism (AML/CFT).

This has been done by updating its supervisor risk assessment tools for Designated Non-Financial Businesses and Professions (DNFBPs), updating its terrorist financing (TF) risk assessment and enhancing the capacity of relevant CFT authorities.

The FATF said that South Africa should continue to work on implementing several action plans to address some of its remaining strategic deficiencies:

  • Demonstrating a sustained increase in outbound mutual legal assistance (MLA) requests that help facilitate ML/TF investigations and confiscations of different types of assets in line with its risk profile;
  • Demonstrating that all AML/CFT supervisors apply effective, proportionate, and effective sanctions for non-compliance;
  • Ensuring that competent authorities have timely access to accurate and up-to-date BO information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to beneficial ownership obligations;
  • Demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile;
  • Enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes in line with its risk profile;
  • Ensuring the effective implementation of targeted financial sanctions and demonstrating an effective mechanism to identify individuals and entities that meet the criteria for domestic designation.

Wasn’t expected

That said, South Africa was only expected to get off the grey list in 2025.

In March, South Africa’s Reserve Bank (SARB) governor, Lesetja Kganyago, said he is confident the country will be withdrawn from international financial crime watchdog FATF’s “grey list” next year.

“We feel confident that South Africa will be removed from the grey list by the next review date, in 2025, given the fixes we are implementing,” said Kganyago.

“(The grey list) has been a costly episode for us,” said Kganyago.

Christopher Malan, Executive Manager of Compliance and Prevention at the Financial Intelligence Unit (FIC), told BusinessTech earlier in the year that they were confident that they could meet a January 2025 deadline, even if they encountered issues with lawyers and real estate agents.