Grey List Exit in Sight South Africa’s Fight Against Dirty Money Pays Off

The National Treasury has announced in the new report of the Financial Action Task Force (FATF) that South Africa has implemented all the protocols required must be taken out of the international watchdog’s dirty-money radar.

The FATF listed South Africa in the grey list in February for not effectively combating illegal activities related to terror financing. However, in May, South Africa was added to the list of high-risk nations by the European Union.

The Treasury released a statement on Wednesday, stating that the FATF has formally rated South Africa’s 18 deficiencies out of 20. Out of these, 15 recommendations were upgraded to no longer be considered deficient, 14 were found to be wholly or largely compliant, and one was deemed not applicable to South Africa.

“Following these re-ratings, South Africa is now deemed to be fully or largely compliant” in 35 of FATF’s 40 recommendations, including five of the watchdog’s six core recommendations, the Treasury said.

Adding South Africa to the gray list has proven beneficial in ending the era of endemic corruption. During the nine-year rule of the former President of South Africa, Jacob Zuma, financial authorities estimated the total looting of taxpayer funds totalling 500 billion rand ($26.7 billion). Financial transactions in the South African region are now subject to increased due diligence.

“While the immediate impact is higher processing, monitoring, and reporting costs, the long-term consequence will be the reduction of South Africa’s attractiveness as an investment destination,” the central bank said in its latest Financial Stability Report on Wednesday. “However, the risk is mitigated by the resilience of the financial sector, compliance with international regulatory standards, and the efforts being made to address the adverse findings of the FATF.”

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