South Africa’s big grey hope for 2025

 ·30 Oct 2024

The Financial Action Task Force (FATF) has updated South Africa’s progress on its 22-item Action Plan, marking nine items as improved—eight as “largely addressed” and one as “partly addressed.”

This means South Africa has now largely or fully addressed 16 of the 22 items, leaving six items to still be completed by the next report, which is due in February 2025.

This update at a FATF plenary in Paris, France on 25 October has provided a boost of optimism for hopes of exiting the grey list by June 2025 – however National Treasury has noted that this “remains a difficult challenge.”

In February 2023, the FATF greylisted South Africa due to inadequate measures against money laundering, terrorist financing, and proliferation financing.

The FATF highlighted the need for South Africa to implement a robust strategy to counter terrorism financing, enhance anti-money laundering efforts, and improve the investigation and prosecution of complex financial crimes.

Very broadly, being on the grey list means the country must address strategic deficiencies within specified timeframes and is subject to intensified monitoring.

Economics Professor Jannie Rossouw from Wits Business School explained that greylisting diminishes South Africa’s attractiveness as an investment destination, leading to higher interest rates and diminished foreign investment.

Since then, the South Africa government made a commitment to working with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to improve its anti-money laundering and counter-terrorism financing (AML/CFT) efforts.

According to a recent statement by the FATF, the country has made good progress by:

  1. Increasing requests for mutual legal assistance (MLA) to other countries.
  2. Enhancing its supervisory capabilities to better oversee designated non-financial businesses and professions (DNFBPs).
  3. Improving its ability to identify, seize, and confiscate assets linked to various crimes.
  4. Updating its strategy to combat terrorist financing (TF) and increasing the relevant authorities’ capabilities based on an understanding of the risks involved.
  5. Ensuring effective enforcement of financial sanctions against targeted individuals and entities.

In a subsequent statement, National Treasury said that it “is pleased with the progress made by South Africa, as recognised by the FATF.”

South Africa is now left with one reporting cycle to address the remaining six action items.

Three of these relate to demonstrating a sustained increase in the investigation and effective prosecution of complex money laundering, terror financing and unlicensed cross-border money or value transfer services (MVTS).

The remaining three relate to the timely access of beneficial ownership information in respect of companies and trusts, and the imposition of remedial action and dissuasive sanctions by designated AML/CFT supervisors. 

“Despite the progress that South Africa has made, National Treasury reiterates its previous communication that… it remains a challenge to exit the grey list at the conclusion of the next cycle, as South Africa will need to address all six outstanding action items by February 2025 to do so,” said Treasury.

If South Africa addresses all remaining action items by February 2025, the FATF Africa Joint Group will visit in May 2025 to assess progress. A positive outcome could lead to a recommendation for delisting from the FATF grey list in June 2025.

If not all items are resolved, South Africa will need to report every four months, delaying potential delisting to October 2025 or later.

Where to from here?

National Treasury’s interdepartmental committee is leading South Africa’s exit from the FATF grey list, reporting regularly to Cabinet and the JCPS cluster.

Treasury said that it has improved action items on legal assistance, asset seizure, and financial sanctions, overseeing progress on four of six outstanding items.

The committee noted that the deadline for beneficial ownership registries has passed, and companies must register accurate ownership information by November 30, 2024.

As of October 2024, South Africa now complies or largely complies with 37 of 40 FATF Recommendations, a significant improvement from the 20/40 in 2021. Two recommendations remain partially compliant: those on Non-Profit Organisations and Cash Couriers.

This compliance status does not impact the greylisting process, and upcoming legislation will further strengthen compliance.

National Treasury said that it recognises progress on 16 of 22 action items but emphasises the need for continued effort to meet all requirements by February 2025.

The FATF Action Items, with the outstanding items highlighted in bold, can be found below:


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