South Africa progresses in shedding its greylist label, per the Financial Action Task Force (FATF) report. The National Treasury highlighted the nation’s strides towards removal from the global watchdog’s scrutiny for financial irregularities and terror financing.
Initially placed on the grey list by FATF in February, South Africa’s challenges in combatting illicit financial flows linger. In May, the European Union also categorized the nation among high-risk countries.
The recent FATF report signified a positive turn by re-evaluating 18 of South Africa’s 20 deficiencies. According to the Treasury’s statement, 15 issues were upgraded, no longer deemed deficient, with 14 recommendations fully or largely complied with. Only one was considered not applicable to South Africa.
“South Africa now shows full or substantial compliance in 35 out of FATF’s 40 recommendations, encompassing five of the six core recommendations,” mentioned the Treasury.
South Africa’s placement on the grey list ensued after an era of endemic corruption, locally termed as ‘state capture,’ under former President Jacob Zuma’s nine-year tenure, estimated to have siphoned off at least R500 billion in taxpayer funds.
Being on the grey list mandates stricter scrutiny on financial dealings involving South Africa, leading to increased processing, monitoring, and reporting expenses. The central bank’s recent Financial Stability Report acknowledged this, anticipating potential drawbacks for the nation’s investment appeal.
Despite these challenges, the bank highlighted the financial sector’s resilience, compliance with global regulatory norms, and ongoing efforts to rectify FATF’s findings.
FATF has set a deadline until January 2025 for South Africa to address its deficiencies. The Treasury emphasized the necessity for a substantial collective effort from relevant authorities in meeting these targets.
The nation’s journey out of the grey list signifies a pivotal period for South Africa’s fiscal credibility and global standing. The continued dedication towards rectifying financial irregularities is crucial for restoring trust and reinforcing South Africa’s position as an attractive investment destination.