SOUTH AFRICA PLACED ON GRAYLIST BY INTERNATIONAL ANTI-MONEY LAUNDERING WATCHDOG

Sat 25 February 2023:

The Financial Action Task Force (FATF) has moved South Africa to the grey list, placing the country to increased monitoring, counter-money laundering, terrorist financing, and proliferation financing. it was confirmed in an update on its website on Friday.

On Friday, the France-based global money laundering and terrorist financing watchdog explained that when it places a jurisdiction on the greylist, it means the country has committed to quickly resolving the identified strategic deficiencies within agreed time frames and is subject to increased monitoring.

The move puts South Africa in the company of countries such as Syria, Haiti, Yemen and Mozambique.

The FAFT said that in February 2023, South Africa had made a high-level political commitment to work with the FATF and Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to strengthen the effectiveness of its Anti-Money Laundering and Combating the Financing of Terrorism regime (AML/CFT).

“Since the adoption of its Mutual Evaluation Report (MER) in June 2021, South Africa has made significant progress on many of the MER’s recommended actions to improve its system including by developing national AML and CFT policies to address higher risks and newly amending the legal framework for Terrorist Financing and Targeted Financial Sanctions, among others,” the FAFT said on Friday.

Friday’s decision was not unexpected. Delivering the Budget in Parliament on Wednesday, Finance Minister Enoch Godongwana said SA should be “prepared for the possibility” of greylisting.

In response to the announcement on Friday, Godongwana said South Africa would work to “swiftly and effectively address all outstanding deficiencies and strengthen the effectiveness of its anti-money laundering and counter-terrorist financing regime”.

Godongwana said Cabinet has considered the action plan put forward by the FATF and had committed to actively work with the watchdog.

“Government recognises that addressing the action items will be in the interest of South Africa, and that doing so is consistent with our existing commitment to rebuild the institutions that were weakened during the period of state capture, the effectiveness of which is essential to addressing crime and corruption,” he said in a statement.

Greylisting is expected to hike the cost of doing business in South Africa by increasing the amount of due diligence companies have to carry out.

South Africans may also find sending funds offshore and transacting with international banks more onerous.

Greylisting has also historically also led to a decline in foreign investment. A report by research firm Intellidex noted last year that capital flows, foreign direct investment and portfolio inflows all tended to decline after a country was greylisted.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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