South Africa likely to be greylisted today

 ·24 Feb 2023

South Africa will be added to a global watchdog’s list of nations that have failed to adequately tackle illicit financial flows, the head of the nation’s tax agency said.

The Financial Action Task Force, which polices compliance with anti-money laundering and terror-financing measures, is expected to give its decision on Friday whether to include South Africa on its so-called grey list.

That’s after an evaluation carried out in 2019 following an era of endemic state corruption found Africa’s most-industrialized economy lacking in all 11 of its effectiveness measures to combat dirty-money flows.

“It is a very rule-driven system which means if you have any outstanding actions then you go onto the grey list, or what they call the observation list,” South African Revenue Service Commissioner Edward Kieswetter said in an online panel discussion hosted by PwC on Friday.

“We started with well over 130 outstanding actions, we are in low double digits now, so we’ve done remarkably well in terms of strengthening the system and I think that will begin to gain momentum.”

Being added to the list may have far-reaching consequences for South Africa’s financial system, cause it reputational damage and possibly lead to capital and currency outflows, the central bank said in May.

Finance minister Enoch Godongwana has already signalled that South Africa will likely be grelisted, and during his budget speech this week said that the country should be prepared for the possibility.

In the budget itself, National Treasury said that “over the longer term, government has asked the FATF to formally reassess South Africa’s compliance during its June 2023 plenary”.

This advance alert for another review has been taken by some investors to mean that a greylisting is now likely, and even expected by the government.

The FATF has been meeting this week and is expected to announce any greylisting actions in a media briefing after the close of the meetings. This is currently scheduled for 18h00 local time.

With Bloomberg

Read: Rand slips as greylisting reality sets in

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