South Africa moves closer to exiting FATF greylist after significant progress
South African is moving towards being lifted from the greylisting.
Image: Independent Media archives
KwaZulu-Natal Finance MEC Francois Rodgers and head of his department Carol Coetzee have expressed excitement at the news that South Africa was moving towards being lifted from the greylisting.
The national Treasury released a statement on June 13 saying that the Financial Action Task Force (FATF) had announced that the country had substantially completed all 22 action items that were contained in the Action Plan adopted when South Africa was greylisted in February 2023.
The country was placed on the greylist due to its failure to adhere to the FATF's requirements in dealing with anti-money laundering (AML) and combating of financing of terrorism (CFT).
The FATF said it would now conduct an onsite inspection on South Africa's compliance with the requirements of being completely removed from greylisting.
The FATF noted during its plenary meeting held in France that South Africa had shown political commitment in dealing with what landed it in greylisting.
'If we are removed from the greylisting, it means that the R5.7 trillion that we had borrowed as the National Treasury and incur interest, you can start negotiating better interest rates on the R5.7 trillion,' said Rodgers.
He said the national treasury was currently paying R1.2 billion a day on interest to repay its loans.
'Should that be reduced, it will ultimately mean that there is more money at a national level, which can be cascaded down to provinces,' said Rodgers.
Coetzee said being removed from greylisting would mean South Africa would now be in a better position to be an investment destination, as it would be considered less risky.
'It means that investors would be very interested to come and invest, and it would mean that the government is settling down, and their (investors) funds are secured,' said Coetzee.
The National Treasury commended the country's law enforcement agencies, the Directorate for Priority Crime Investigation (DPCI), the State Security Agency, and the National Prosecuting Authority (NPA), for their sustained increase in investigations and prosecutions of serious and complex money laundering and terror financing activities.
'This made it possible for South Africa to secure the upgrades of the last two remaining action items, often considered to be the most difficult, in the current reporting cycle,' read a statement from the National Treasury.
The Treasury said FATF had noted that South Africa demonstrated 'a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of [terror financing] TF activities in line with its risk profile, updating its TF Risk Assessment to inform the implementation of a comprehensive national counter financing of terrorism strategy.'
'The improvements to South Africa's AML/CFT regime are particularly important for South Africa, given the legacy of state capture, one element of which was that law enforcement and prosecuting institutions were deliberately weakened. Improvements in these domains are critical not just for getting off the greylist, but for strengthening the fight against crime and corruption, and for contributing to the integrity of the South African financial system.
'Exiting the FATF greylist is a significant step forward as South Africa continues to improve and strengthen its supervisory and criminal justice systems,' read the treasury.
However, the Umkhonto Wesizwe Party (MKP) called on the country not to jump into celebrating the FATF's move as the ANC continued with its chaotic policies and its failure to deal with the Phala Phala matter.
'This (Phala Phala) controversy raised alarming questions about financial controls, money laundering and the credibility of the President's own financial conduct, fueling international suspicion about South Africa's ability to manage financial crimes,' read MKP's statement.
The party said the very fact that the FATF will still have to conduct an on-site assessment to verify South Africa's compliance 'speaks volumes about the fragility and questionable integrity of our financial oversight system.'
'This is not a routine check; it is a clear sign that international bodies have serious doubts about the reliability of South Africa's own reports and reforms.
'It underscores the deep trust deficit the ANC government has created, both at home and abroad.
'Until these doubts are fully dispelled, South Africa's voice on the global financial stage remains weak and contested,' read MKP's statement.
ANC national spokesperson Mahlengi Bhengu described FATF's move as a major milestone for South Africa, both domestically and internationally.
'It strengthens the credibility of our financial system and contributes to the global and national fight against illicit financial flows, terrorism financing, and the legacy of state capture.
'We will continue to support government efforts to fully comply with global standards, ensuring that the country is permanently removed from the greylist and that our financial systems are protected from abuse,' said Bhengu.
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