SA still on FATF grey list, has more work to do

In its latest update on South Africa’s progress in addressing shortcomings in its anti-money laundering/counter financing of terrorism (AML/CFT) regime, the Financial Action Task Force (FATF) noted that the country has made progress, but has yet to do enough to warrant its removal from the so-called grey list on which it was placed in late February 2023.

South Africa was added to the grey list – a group of jurisdictions which show weaknesses in combating money laundering and terrorist financing, according to FATF’s standards – after shortcomings in its anti-money laundering and -terrorist financing legal framework were highlighted in the FATF 2021 mutual evaluation review. The country was given a deadline of one year to address the gaps to the FATF’s satisfaction – which it failed to do.

When the FATF met in February 2023 to deliberate on South Africa’s efforts, there were still eight issues outstanding and the global watchdog was not completely satisfied that all possible progress had been made.

South Africa is the only African FATF member and since signing up to abide by the FATF recommendations in 2003, had managed to avoid the grey list, until 16 months ago.

The watchdog held its latest round of plenary meetings in Singapore in the last week in June.

Strategic deficiencies

South Africa should continue to work on implementing its action plan to address its remaining strategic deficiencies, says the FATF, and by sustaining the implementations. The points emphasised by the FATF include:

• demonstrating a sustained increase in outbound mutual legal assistance (MLA) requests that help facilitate money laundering and terrorist financing investigations and confiscations of different types of assets in line with its risk profile;
• demonstrating that all AML/CFT supervisors apply effective, proportionate, and effective sanctions for non-compliance;
• ensuring that competent authorities have timely access to accurate and up-to-date beneficial ownership information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to beneficial ownership obligations;
• demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of terrorist financing activities in line with its risk profile;
• enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes, in line with its risk profile;
• ensuring the effective implementation of targeted financial sanctions and demonstrating an effective mechanism to identify individuals and entities that meet the criteria for domestic designation.