South Africa was now on track to exit greylisting in June next year, National Treasury said yesterday.
South Africa was grey listed by the Financial Action Task Force (FATF) in February 2023 for not complying with international standards that relate to money-laundering and addressing illicit financial flows.
While South Africa was on track to address all the outstanding Action Items, Treasury said it remained “a tough challenge” to address all 14 of the remaining Action Items by February 2025.
This out of an original list of 22 issues.
Treasury said, “All relevant agencies and authorities will need to continue to demonstrate significant improvements, and also that such improvements are being sustained and effective. The minister of finance has been leading a process within the government to ensure that South Africa addresses all Action Items by February 2025 to enable South Africa to exit greylisting by June 2025,” it said.
Being greylisted means local individuals and businesses are subject to more scrutiny regarding their source of funds, counterparties and reasons for transactions before international companies will do business with them. This as additional due diligence will come at a cost, which is passed onto the consumer whether it is through administration fees, reduced rates or increased prices.
Treasury said in FATF’s latest update the June 2024 FATF plenary meetings in Singapore had accepted the report of the FATF Africa/ Middle East Joint Group that South Africa had largely addressed three further Action Items, with 14 outstanding items left to address from the original 22.
Some of the measures the June 2024 FATF report noted South Africa still had to tackle included demonstrating a sustained increase in outbound mutual legal assistance; demonstrating that all anti-money-laundering/counter-terrorist financing supervisors applied effective, proportionate, and effective sanctions for non-compliance; and demonstrating a sustained increase in investigations and prosecutions of serious and complex money- laundering and the full range of terrorist financing activities in line with its risk profile.
The FATF calls on countries that are greylisted to complete their remedial action plans within the agreed timeframes.
South Africa is required to address all 22 Action Items to exit the greylist.
Treasury said, “South Africa is left with two reporting cycles in September 2024 and January 2025 in terms of the Action Plan. Many of the 14 outstanding items are due in the last two reporting cycles because South Africa has to demonstrate the improvements made are sustained over successive reporting periods.
“In the next reporting cycle, South Africa is required to address (or at least largely address) nine of the outstanding Action Items in the Action Plan that are due in September 2024. The final five Action Items are due in January 2025,” it said.
If the FATF plenary determines in February 2025 that South Africa had addressed or largely addressed all 22 Action Items, it would schedule an on-site visit of the Joint Group in April/May 2025 to confirm that assessment and make a recommendation to the June 2025 FATF plenary to remove the country from the FATF greylist, Treasury pointed out.
BUSINESS REPORT