Getting off the Financial Action Task Force's (FATF) 'Grey List'

By Wilna Scholtz, Director, KISCH Tax Advisory 

The Financial Action Task Force’s (FATF) classed South Africa as a jurisdiction “subject to increased monitoring” in February 2023, also unofficially referred to as the ‘grey list’, which reflects a country’s poor adherence to international anti-money laundering and anti-terror financing protocols. 

The Financial Action Task Force, also known by its French name, Groupe d'action financière, is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering and (in 2001) terrorism financing. 

South African made a commitment to work with the FATF and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) to bolster the efficacy of its anti-money laundering and combating the financing of terrorism (AML/CFT) regime. All jurisdictions assigned ‘grey list’ status are actively working with the FATF to address the deficiencies in their AML/CFT. When the FATF places a jurisdiction under increased monitoring, the country in question commits to implement an Action Plan to timeously resolve the identified deficiencies within set timeframes. South Africa’s Action Plan listed 22 items linked to strategic deficiencies with the set timeframe falling between January 2024 and January 2025. 

Should South Africa be assessed to have largely addressed all 22 Action Items by February 2025, the FATF will schedule an on-site visit in April/May 2025, to confirm the assessment and make a recommendation to the June 2025 FATF plenary.  

National Treasury indicated that, to date, the items that have been addressed/largely addressed (of the 22) relate to:

• The legal provisions criminalising terrorist financing and underpinning South Africa’s targeted financial sanction regimes; 
• Increasing the use of financial intelligence from the Financial Intelligence Centre to support money-laundering investigations; 
• The introduction of risk-based tools to identify higher-risk designated non-financial businesses and professions; 
• Updating the country’s Terror Financing National Risk Assessment; and 
• Increasing the resources and capacity of relevant authorities. 

South Africa has two remaining reporting cycle deadlines in which to address the outstanding Action Items - September 2024 (must address/largely address nine outstanding Action Items) and January 2025 (must address/largely address the final five outstanding Action Items). 

Although South Africa has made significant progress towards getting off the Financial Action Task Force grey list, there is still work to be done and, according to National Treasury, removal from the grey list is unlikely to happen before June 2025. 

With regards to FATF and anti-money laundering and combating the financing of terrorism in other African countries, Zimbabwe was grey-listed in 2019 and removed in 2022, Botswana was grey-listed in 2018 and removed in 2021, Morocco was grey-listed in 2021 and removed in 2023, and Mauritius was grey-listed in 2020 and removed in 2021. 

If you have any queries on the above or require any tax advice, please contact: 

Wilna Scholtz 
Director
KISCH Tax Advisory 
+ 27 83 265 2573
Wilnas@kisch-ip.com