By Lehlohonolo Lehana.
The African National Congress (ANC) has called on the government to address the deficiencies that have resulted in South Africa being added to grey list of countries with inadequate anti-money laundering and terrorist financing (AML/CFT) controls.
On Friday, the Paris-based anti-money laundering watchdog added South Africa to its list of countries that will be monitored to ensure the implementation of anti-money laundering and terrorism funding regulations.
The widely expected addition of SA to FATF’s financial grey list relegates the country to an expanded list of 25 jurisdictions that the Paris-based organisation subjects to increased monitoring to spot issues ranging from suspicious cross-border transactions to proliferation financing.
ANC spokesperson Mahlengi Bhengu-Motsiri says that the government should implement the action plan “swiftly” to ensure that the 2025 deadline will be met to meet outstanding actions.
“The South African government has until November 2025 to address these deficiencies, failing which our country will be negatively affected economically.
“We call on the government to take active steps swiftly to implement the Action Plan and the National Strategy on AML/CFT which was adopted by the Cabinet in November 2022.”
Bhengu-Motsiri says that the ANC also welcomed Finance Minister Enoch Godongwana’s steps to address the outstanding matters by tabling an “Action Plan” to Cabinet.
“These initiatives have already been communicated to the FATF President, Raja Kumar – a clear demonstration of South Africa’s commitment to work with the FATF and ESAAMLG swiftly and effectively to address all outstanding deficiencies and strengthen the effectiveness of our AML/CFT regime.”
South Africa joins countries like Nigeria, South Sudan, Mali and Morocco that have been added to the FATF greylist.
National Treasury on Friday issued a statement saying the government notes the FATF decision to list South Africa as a “jurisdiction under increased monitoring”, or more commonly referred to as FATF’s “grey list”.
“Following intensive engagements with FATF over progress made by South Africa since the publication of its Mutual Evaluation Report [MER] in October 2021, including a face-to-face meeting held in Morocco on 13 January 2023, the FATF informed the South African Government that it recognised the significant and positive progress made by the country in addressing the 67 recommended actions or deficiencies highlighted in the MER,” said Treasury.
Following engagements with FATF, it assessed that the country needed to make further and sustained progress in addressing the eight areas of strategic deficiencies related to the effective implementation of South Africa’s anti-money laundering/combating the financing of terrorism laws as set out in the FATF’s statement,” it noted.
Further ratings downgrade?
There is also a possibility that South Africa may be downgraded further by the credit rating agencies, said economist Dawie Roodt. However, he does not believe the move will have a massive impact on the economy.
“It will however cause much more red tape.”
He said the sector that will be affected directly is the financial industry such as banks, stockbrokers and asset managers. The grey-listing will affect capital flows. He also expects an indirect impact on trade and trade financing.
Roodt pointed out that countries that end up on the FATF grey-list usually also ended up being downgraded.
“To be honest, I am not too concerned about this. If we are serious about fixing the concerns raised we can get back onto the white-list fairly quickly. In fact, it can happen within a couple of months if we are really serious,” he said.