Over a year after South Africa's greylisting by the Financial Action Task Force (FATF), significant improvements have been made to the country's anti-money laundering (AML) and countering the financing of terrorism (CFT) framework. Despite this progress, more work remains before South Africa can be removed from the greylist.

Initially, South Africa was criticized for not fully complying with international standards for preventing money laundering, terrorist financing, and proliferation financing. Recently, FATF assessors noted that South Africa had addressed most of the technical compliance deficiencies in its AML/CFT framework. South Africa's ratings were upgraded for 17 recommendations, and the country is now rated as either compliant or largely compliant with 34 of the FATF’s 40 recommendations.

The technical progress is undeniable and acknowledged by the FATF, but this positive trend must continue and result in tangible outcomes for South Africa to be removed from the greylist.

The 2022 amendments to the Financial Intelligence Centre Act (FICA) are set to significantly enhance financial monitoring and compliance among Accountable Institutions. These amendments aim to level the playing field regarding compliance expectations, fill the technical gaps raised by the FATF report, and equip the Financial Intelligence Centre with the appropriate powers and responsibilities.

Key terms such as ‘beneficial owners,’ ‘prominent influential persons,’ and ‘politically exposed persons’ have been redefined, with clarified expectations on risk management, compliance programs, and due diligence measures for accountable institutions. The 2022 amendments also grant additional powers and responsibilities to the Financial Intelligence Centre, including improved access to information held by other state bodies or accountable institutions and the ability to renew a direction not to proceed with a transaction.

A recent IMF study found that the economic impact of being placed on the FATF greylist could result in a yearly contraction of 7.6% of GDP in capital inflows. While it may be too soon to quantify the impacts on South Africa, the key takeaway is that it is safer not to remain on the greylist for too long.

In the long term, removing South Africa from the FATF greylist and continuing to improve national measures against money laundering and terrorism financing brings significant benefits. A financial system that operates with integrity and transparency forms the backbone of a thriving economy.

South Africa’s AML/CFT framework is rapidly developing, and supervision will only grow tighter on the private sector. Therefore, businesses must proactively build their internal compliance programs and be ready to demonstrate impeccable AML/CFT controls.

Strategies for Removing South Africa from the Greylist