SA is making progress in leaving the FATF gray list and is now addressing the final action items

South Africa has met 16 of the 22 action points required to leave the Financial Action Task Force (FATF) gray list, as announced by the National Treasury. This leaves six outstanding action items to be addressed prior to the final reporting cycle, which will conclude in February 2025. The FATF, an international standard-setting body, identifies countries with strategic anti-money laundering (AML) and terrorist financing (CFT) practices. ) shortcomings via the gray list.

The National Ministry of Finance emphasized that while substantial progress has been made, significant efforts are still needed to address remaining challenges. “South Africa is working hard to address all outstanding action items by February 2025, although this remains a challenging task,” the Ministry of Finance said on Friday. “All relevant agencies and authorities must continue to ensure that these improvements are sustainable and effective.”

The remaining action items are divided into two main areas. The first series, focused on investigations and prosecutions, aims to increase the response to complex money laundering, terrorist financing and cross-border money or value transfer services (MVTS). The second set involves ensuring quick and accurate access to beneficial ownership information for companies and trusts, and imposing sanctions by AML/CFT regulators.

Interdepartmental Committee and Compliance Updates

An interdepartmental committee, led by the National Ministry of Finance and working closely with the Justice, Crime Prevention and Security (JCPS) cluster, has driven coordination efforts to secure this progress. This committee has ensured compliance with outgoing requests for mutual legal assistance, the seizure and confiscation of the proceeds of crime, and targeted sanctions.

However, challenges remain, especially in updating beneficial ownership registers. As of the FATF Africa Joint Group review in September 2024, beneficial ownership coverage remains too low for both companies and trusts. To address this, the Treasury has urged all companies and trustee service providers to register accurate beneficial ownership information with the Companies and Intellectual Property Commission (CIPC) and the Masters Office by November 30, 2024.

Potential FATF assessment and gray list exit

If South Africa successfully addresses the six remaining issues by February 2025, the FATF Plenary will authorize an on-site assessment by the FATF Africa Joint Group around May 2025. A positive outcome of this assessment could lead to a recommendation for the delisting of South Africa. gray list at the June 2025 FATF plenary meeting. However, if deficiencies persist, South Africa will be required to report progress every four months, potentially delaying exit from the gray list until October 2025 or beyond.

South Africa’s first gray list in February 2023 revealed shortcomings in meeting international standards on money laundering and illicit financial flows. Since then, the country’s strong response has strengthened its position, with active involvement of relevant departments to strengthen financial integrity and address remaining concerns to restore full compliance.