This Discussion Document summarises the recent developments in South Africa on the possibility of being grey-listed by FATF (the Financial Action Task Force) in October 2022. The FATF is an intergovernmental body that promotes policies to protect the global financial system against money laundering and terrorist financing.
Post ‘State Capture’, South Africa was audited by the International Monetary Fund (IMF) on behalf of Financial Action Task Force, and this spurred a process of implementing various measures to avoid being “grey-listed”. FATF (2021) found various loopholes that criminals can exploit, and that prosecution is inadequate given the country’s risk profile.
This Discussion Document discusses what grey-listing entails, why it is done, why South Africa might be grey-listed, the measures they have put in place (to date) and consider the potential consequences of being added to the grey-list.
Although the results presented here point out to a less worrisome scenario in case of a greylisting, it is very important to highlight that if the country does not address the issues raised in the mutual evaluations, it could be included in the back-list. This would have dire consequences, such as having to face sanctions from important institutions like the IMF, World Bank, and the African Development Bank.