Categories: Finance NewsNews
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2023-12-01 12:50 PM

South Africa’s Strides: Exiting Greylist Strengthens Fiscal Integrity

  • South Africa is making significant progress in addressing its deficiencies highlighted by the Financial Action Task Force (FATF) to exit the global watchdog's greylist, indicating improvements in tackling illicit financial flows and combating terror financing.
  • The country has seen positive re-ratings on 18 out of 20 deficiencies identified by FATF, showcasing substantial compliance and rectification of previously flagged issues, contributing to the nation's enhanced adherence to international regulatory standards.
  • Despite challenges posed by increased scrutiny leading to higher operational costs, South Africa's financial sector resilience, compliance efforts, and concerted actions by relevant authorities demonstrate a commitment to rectify shortcomings and regain trust, crucial for its global investment appeal.
By Miriam Matoma

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.

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Miriam Matoma

Miriam is a freelance writer, she covers economics and government news for Rateweb. You can contact her on: Email: Twitter: @MatomaMiriam