Decision to greylist SA not geopolitical, says Kumar

The president of the Financial Action Task Force (FATF) has dismissed any suggestion of geopolitical reasons – relating to South Africa’s close ties to Russia – as a contributing factor behind their decision to greylist South Africa.

Raja Kumar says South Africa is being added to the list due to strategic deficiencies identified in its anti-money laundering and counter-terrorism financing systems.

The South African government says it has eight outstanding recommendations to address while 67 deficiencies that were flagged by the financial watchdog have been addressed.

Kumar has encouraged the country to address the outstanding recommendations as soon as possible.

“This whole process is a technical process and countries are assessed objectively against the FTAF standards. We have an obligation evaluation team that comprises assessors from different jurisdictions that essentially go in and make a technical assessment of the country and how it fares against the FATF standards. And as I’ve shared with you earlier, South Africa has agreed on an action plan, I’ve seen that there’s a high-level political commitment on the part of the South African government to improve its system.”

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The state capture commission of inquiry put South Africa under scrutiny by the Financial Action Task Force, the global money laundering and terrorist financing watchdog.

This move was put in place to get the country to implement standards that could prevent money laundering and terrorism financing.

On Friday, FATF announced that it has placed the country in the greylist, along with Nigeria. The two countries are Africa’s biggest economies.

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However, in a statement, the global financial watchdog says South Africa has made significant progress on many of its recommendations to improve its systems.

National Treasury says although the country is placed on this list, the impact of it will not be significant.

Acting Director General at the National Treasury, Ismail Momoniat says, “In our case, the impact I suspect will not be very significant because FAFT has acknowledged to what extent we have addressed many of the issues and as long as the period is short I think that we could deal with some of the consequences and I think for the continent it’s something that we do need to access.”

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Analysts say since the announcement was made, the rand has been under pressure.

Economist Dawie Roodt says South Africa’s failure to do enough to counter illegal activities like money laundering led to its greylisting.

Roodt says the implications could be far-reaching. “I was actually hoping that we will not be greylisted- and I know for instance that the minister of finance made some money available to make sure that we set the measures in place to move us back to the white list again. This is certainly not good news for South Africa- and I can see that the rand is under pressure this afternoon. But in addition to that, I just learned that the Americans are proposing to reconsider their relationships with South Africa, and I think that is a contributing reason why the rand is under pressure at the moment. The Americans mention for example- our military training with the Russians and with the Chinese- and many other reasons as well- and there’s certainly a possibility that South Africa will be kicked off the so-called AGOA Act.”

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Source: SABC News (