Greylisting should make South Africans see red
The Financial Action Task Force (FATF) placed South Africa on its grey list on Friday. It was almost inevitable. The global anti-money laundering watchdog first warned the country of this possibility four years ago, in 2019, saying that there were severe deficiencies in our standards to fight corruption and money laundering.
The decision is a massive embarrassment, as South Africa failed to implement the necessary legislation and measures to prevent money laundering and terror financing in four years.
This coincided with hair-raising testimonies of corruption and state capture before the Zondo Commission, and, more recently, allegations of continued rampant corruption at Eskom by the former CEO André de Ruyter, among other things.
For a country that has vowed to fight corruption, following a decade of state capture, the powers that be should hang their heads in shame.
In some countries, the minister of finance and the president would resign.
South Africa now joins a club of 23 countries on the grey list – the likes of Albania, Barbados, Burkina Faso, Haiti, Jordan, Nigeria (also added on Friday), Panama, South Sudan, Syria, Turkey and Yemen.
FATF removed Cambodia and Morocco from the list.
“When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolving swiftly the identified strategic deficiencies within agreed time frames,” FATF said in a statement on Friday.
After the announcement, the rand saw a benign weakening – which underlined the fact that the greylisting was pretty much a given.
The impact may, therefore, not be as severe as it could have been if it was a surprise, but it will still mean that capital and portfolio flows to the country will continue to decline.
The long-term opportunity cost may be more severe, as many countries will now look to other jurisdictions for long-term investment.
Hopefully, National Treasury will continue to address the deficiencies in our financial system with the same enthusiasm it has over the past year – and not just to check all the boxes to be removed from the FATF’s list.
The main prerogative should be to be to put regulations, processes and procedures in place to actually curb corruption and money laundering in the country.
After all, this is why the FATF exists in the first place.
Our financial system must be ruthless in identifying illicit transactions and prosecuting the offenders. In many ways, it would be easier to investigate the acts of theft.
Overall, it is more proof of how the Ramaphosa administration is failing South Africa and South Africans.