South Africa eyes exiting FATF grey list in 2025

The government “expects to address all the deficiencies” identified by the Financial Action Task Force (FATF) by early 2025, Finance Minister Enoch Godongwana said in his 2023 medium-term budget speech on Wednesday.

Giving an update on how SA is progressing in relation to exiting the so-called grey list, he confirmed that “15 of the 20 technical deficiencies” in the country’s legal framework to “fight against organised crimes and illegal financial flows” have been addressed.

Read: South Africa greylisted by FATF

His comments around addressing the FATF red flags by early 2025 mean government hopes to be off the grey list when the global anti-money laundering watchdog meets in June that year.

“Fighting crime is a key ingredient of enhancing economic growth,” stressed Godongwana.

“Since February, when South Africa was greylisted by the FATF, a large number of government departments and agencies – including the police, the Hawks [Directorate for Priority Crime Investigation], NPA [National Prosecuting Authority], SIU [Special Investigating Unit], SSA [State Security Agency], the Reserve Bank, FSCA [Financial Sector Conduct Authority], and Sars [South African Revenue Service] – have been working hard to address these deficiencies,” he said.

“The FATF noted at its plenary meeting last week that such work is showing positive results, with South Africa having addressed 15 of the 20 technical deficiencies in our legal framework, and making good progress on 17 of the 22 ‘effectiveness action items’, including two that are now deemed to be largely addressed,” added Godongwana.

“However, there is also a significant amount of work that must still be done, particularly with regard to the investigation and prosecution of complex money laundering cases and terror financing, the identification of informal mechanisms for remitting money around the world, and the recovery of the proceeds from crime and corruption,” he conceded.

Progress welcomed

Business Leadership SA (BLSA) CEO Busi Mavuso welcomed the progress made thus far by government in addressing the greylisting issue.

However, she also cautioned that “there remains considerable work to be done, particularly in ensuring the changes are effective”.

“BLSA is supporting these efforts through our wider support of the criminal justice system through our memorandum of understanding with the NPA and the work by Business Against Crime to support the police and other institutions across the criminal justice system,” she said.

“Ultimately, South Africa needs to demonstrate to FATF that it can police and prosecute serious financial crime before we will escape the greylist,” added Mavuso.

“The minister said he expects to have met FATF requirements by early 2025, which would enable removal from the list at the FATF plenary in June 2025,” she noted.

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Meanwhile, Godongwana said that government is also “devising ways to make better and more targeted use of the Criminal Asset Recovery Account (Cara) to address crime”.

“Among these efforts, and emanating from the Presidential project on illicit mining strategy, a recommendation has been made for cabinet to consider using money from the fund to combat illegal mining,” he added.

“The SA Police Service, Defence Force, the Financial Intelligence Centre, the Department of Home Affairs and the Border Management Authority have all received allocations from this fund.”