South Africa's journey towards exiting the FATF greylist faces significant challenges, with key action items still outstanding. This article explores the government's efforts and the implications of remaining greylisted.
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Have we done enough as a country to be removed from the Financial Action Task Force (FATF’s) greylist? Not yet. So, what has hindered us from fulfilling our promise? In the FATF Mutual Evaluation Report published in October 2021, we were found to lack essential measures to combat money laundering and terrorist financing effectively.
In haste, in late December 2022, the government implemented legislative changes through the General Laws Amendment Act, amending five pieces of legislation: the Trust Property Control Act, the Nonprofit Organisations Act, the Financial Intelligence Centre Act, the Companies Act, and the Financial Sector Regulation Act. Despite these legislative changes, which require further amendment and alignment, in February 2023, the FATF placed South Africa on its greylist for failing to comply with international standards on anti-money laundering and terrorist financing. Consequently, we became subject to increased monitoring.
In light of the adverse effects of being greylisted, the government made a bold commitment to do everything possible to achieve removal from the greylist, setting a goal to do so by early 2025, two years after the greylisting. Mauritius managed to be removed from the greylist in less than two years and was among the first to do so before the FATF’s deadline. When we were greylisted, we were tasked to address 22 shortcomings/action items before we could be removed from the greylist. The best we can do is to be removed from the list in October 2025.
October 2024 status of greylisting
Until October 2024, the government was optimistic that we would be considered to be removed from the greylist in early 2025, having 6 of the 22 items outstanding. These items included:
Although the government’s target was to address the action item relating to beneficial ownership information by September 2024, the coverage for both companies and trusts was assessed to be too low by the FATF Africa Joint Group in September 2024. The Department of Justice and Constitutional Development issued a Media Statement on 17 September 2024 titled “Trustees not complying with the provisions of the amended Trust Property Control Act to face harsher punishment”. Trustees were warned that the low compliance rate in submitting beneficial ownership registers for trusts is expected to jeopardise South Africa’s chances of meeting the early 2025 deadline for exiting the greylist. To improve our chance of exiting the greylist in early 2025, the media statement then set a deadline for filing the beneficial ownership registers with the Master by 15 November 2024.
National Treasury provided a progress update on 25 October 2025, following the FATF Plenary, which took place on the same day. National Treasury also called upon all companies and professional trustee service providers to ensure registration by companies and trusts they engage (or are involved) with before 30 November 2024 to increase the coverage in beneficial ownership registries significantly. The Master conducted a webinar, “Unlocking Transparency: Paving the way for trust and accountability with our Trust Beneficial Ownership Register”, on 29 October 2024 to discuss challenges and solutions. The aforementioned deadlines were reiterated. Trustees were warned about possible penalties for non-compliance with the legal requirement to submit these registers.
The government needed to demonstrate that it effectively applies sanctions for breaches of transparency obligations regarding legal entities.
The government needed to enhance its investigations and prosecutions of serious money laundering.
The government needed to demonstrate the enhancement of the identification, seizure, and confiscation of proceeds from predicate crimes.
The government needed to show that it regards low-value electronic funds transfers among Common Monetary Area (CMA) countries as cross-border transactions.
The government needed to show that it had implemented measures to prevent the misuse of NPOs for money laundering and terrorist financing activities.
February 2025 status of greylisting
On 21 February 2025, the FATF announced the upgrade of four of the six outstanding action items following its latest plenary meetings held in France. This enhanced South Africa’s status to having addressed or largely addressed 20 of the 22 action items in its Action Plan. The significant efforts of trust and company service providers have paid off, resulting in the beneficial ownership action item being regarded as “largely addressed”. The participants deserve commendation for their contributions. However, it would be advantageous for the country if the momentum were to be maintained, as several companies and trusts still need to submit their beneficial ownership registers. Hence the status of being “largely addressed”.
Demonstrating sufficient compliance with all the action items by January 2025 would not, on its own, have resulted in South Africa’s removal from the greylist in June 2025. Had South Africa addressed all 22 action items, the FATF plenary in February 2025 would have authorised an on-site visit by the Africa Joint Group to confirm its assessment of the progress, which would have taken place around May 2025. To maintain and improve compliance with the beneficial ownership requirements, CIPC has already introduced stringent measures for non-compliant companies, including administrative fines, potential legal action, and, in extreme cases, even company deregistration due to non-compliance with the Companies Act. The Trust Property Control Act is also undergoing revision, with stricter measures for non-compliance expected. Therefore, non-compliant and compliant trusts and companies must keep the momentum to submit up-to-date information.
With two items remaining, South Africa has missed its own deadline for removal from the list. The two outstanding items, which were originally scheduled to be addressed by January 2025, are:
The National Treasury’s media statement on 21 February 2025 noted the ongoing efforts by all law enforcement agencies to demonstrate significant progress regarding the two action items not yet upgraded, related to the investigation and prosecution of serious and complex money laundering and terrorist financing. The FATF statement issued on 21 February 2025 after its plenary states the following regarding South Africa: “Since February 2023, when South Africa made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, South Africa has taken steps towards improving its AML/CFT regime including by demonstrating that all supervisors apply effective, proportionate, and effective sanctions, ensuring competent authorities have timely access to accurate and up to date BO information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to beneficial ownership obligations. South Africa should continue to work on implementing its action plan to address its remaining strategic deficiency on demonstrating a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile.”
South Africa was given the first four-month cycle, from March 2025 to June 2025, to address the remaining items. South Africa will be considered for delisting from the FATF greylist in October 2025. An onsite visit by the FATF Africa Joint Group is planned for around May 2025. In the media statement, Treasury undertook to continue addressing both outstanding action items by June 2025 to enable an exit from the greylist by October 2025. Treasury confirmed that the government’s investigation and prosecution teams are working closely in terms of a prosecution-guided investigation strategy to ensure that they demonstrate sustained progress as required by the FATF.
Conclusion
If the FATF Africa Joint Group recommends delisting South Africa, the FATF Plenary will make the final decision in June 2025. Should South Africa not be delisted by October 2025, it will be required to continue reporting to the FATF Africa Joint Group every four months until all action items have been addressed. This situation would not bode well for the country.
* Van der Spuy is a Chartered Accountant with a Masters degree in tax and a registered Fiduciary Practitioner of South Africa®, a Chartered Tax Adviser, a Trust and Estate Practitioner (TEP), and the founder of Trusteeze®, the provider of a digital trust solution.
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