SA's exit from greylisting may be pushed out from June 2025 to October 2025 …or later

25 Oct 2024

The Financial Action Task Force (FATF) released an update on South Africa’s greylist status, with nine items from a 22-item action plan addressed to some degree.

Eight items have been updated to reflect as “largely addressed” while another is classified as “partly addressed”. This means South Africa is now deemed to have mostly or fully addressed 16 of the 22 items in its action plan, leaving just six outstanding items to be addressed.

Read more: Treasury cautiously optimistic that SA will brave ‘tough challenge’ to get off FATF greylist

In a statement issued late on Friday afternoon, the National Treasury indicated it is pleased with the progress made by South Africa, as recognised by the FATF in its official statement as below:

“South Africa has taken steps towards improving its AML/CFT (anti-money laundering/combating the finance of terrorism) regime by:

demonstrating a sustained increase in outbound mutual legal assistance requests,

strengthening its AML/CFT supervisory capacity by improving the risk-based supervision of designated non-financial businesses and professions,

enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes, in line with its risk profile,

the update and implementation of its anti-terrorist financing (TF) strategy and increasing relevant authorities’ TF capabilities on the basis of an understanding of TF risks; and

ensuring the effective implementation of targeted financial sanctions.”

South Africa is now left with one reporting cycle to address the remaining six action items. The first three items relate to demonstrating a sustained increase in the investigation and prosecution of complex money laundering, terror financing and unlicensed cross-border money or value transfer services (MVTS).

The remaining three relate to timely access to beneficial ownership information for companies and trusts and the imposition of remedial action and dissuasive sanctions by designated AML/CFT supervisors.

However, the National Treasury has noted that it remains a challenge to address the six outstanding items by February 2025.

If South Africa is successful in addressing all remaining action items in the next reporting cycle, the February 2025 FATF Plenary will authorise an on-site visit by the FATF Africa Joint Group to confirm their assessment on the progress of all action items. This would happen around May 2025. If the onsite assessment results in a positive outcome, the FATF Africa Joint Group will recommend to the June 2025 FATF Plenary that South Africa be delisted from the FATF grey list.

However, Treasury cautions that if the FATF Africa Joint Group assesses that South Africa has not adequately addressed all remaining action items in February 2025, South Africa will be required to continue reporting back to the FATF Africa Joint Group every four months until all the action items have been addressed. This means the country’s exit from greylisting status would be moved from June 2025 to October 2025, or later.

The interdepartmental committee, chaired by the National Treasury, to co-ordinate the exit from greylisting has noted that the action item related to beneficial ownership registries is out of date as it was due in September 2024, as the coverage for both companies and trusts was assessed to be too low by the FATF Africa Joint Group in September 2024.

“It is incumbent upon all companies and trusts to ensure they have registered accurate beneficial ownership information with the CIPC and Masters Office respectively, in accordance with their legal obligations. National Treasury calls upon all companies and professional trustee service providers to ensure registration by companies and trusts they engage (or involved) with before 30 November 2024, to significantly increase the coverage in beneficial ownership registries,” the statement from National Treasury says.

There have been notable moves by authorities to improve monitoring by issuing sanctions where companies have failed to comply with the Financial Intelligence Centre (FIC) Act.

Read more: Financial services offenders to pay up a collective R36.9m in sanctions this year

The Financial Sector Conduct Authority (FSCA) and the South African Reserve Bank, in particular, are taking no prisoners in their quest to clean up the sector.

Read more: Financial services regulators lay some smack down as potential greylisting removal date approaches

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