SA works on exiting FATF grey list

National Treasury has noted that whilst South Africa is on track to address all the outstanding action items by the Financial Action Task Force (FATF) with regards to the country’s grey listing, it remains a challenge to address all 17 of the remaining action items by February 2025.

“All relevant agencies and authorities will need to continue to demonstrate significant improvements, and also for such improvements are being sustained,” National Treasury said on Thursday.

The FATF is the international standard-setting body that oversees global compliance with anti-money laundering rules.

“The February 2024 FATF Plenary adopted a report by the Joint Group, confirming that five of the 22 action items are now addressed or largely addressed. These relate to the legal provisions criminalizing terrorist financing and underpinning South Africa’s targeted financial sanction regimes related to terrorism financing and proliferation financing, increasing the use of financial intelligence  from the Financial Intelligence Centre to support money laundering investigations, and increasing the resources of AML/CFT [Anti-Money Laundering and the Combating of the Financing of Terrorism] supervisors,” National Treasury said.

The FATF grey listed South Africa at its February 2023 Plenary meetings where a jointly agreed Action Plan was adopted listing 22 action items linked to the strategic deficiencies identified in the AML/CFT regime.

The FATF grey list refers to the FATF’s practice of publicly identifying countries with strategic AML/CFT deficiencies. The FATF maintains two such lists with one being jurisdictions under “increased monitoring” that are actively working with the FATF to address strategic deficiencies in their regimes” and secondly “high-risk jurisdictions subject to a call for action” that are not actively engaging with the FATF to address these deficiencies.

South Africa is required to address all 22 to exit the FATF grey list.

“The deadlines for addressing the action items fall between January 2024 to January 2025. Should South Africa be assessed to have largely addressed all 22 Action Items in February 2025, the FATF will schedule an onsite visit in April/May 2025, to confirm that assessment and make a recommendation to the June 2025 FATF plenary.

“In this cycle of reporting, the FATF also considered that two further action items that were previously not addressed, have now been partly addressed, confirming that 14 of the 17 outstanding action items have now been partly addressed.

“Three action items still have not been addressed as yet. The deadline for South Africa to address (or at least largely address) four of the outstanding action items in the Action Plan, is May 2024,” National Treasury said.

The FATF will consider South Africa’s progress on these action items at its plenary meeting in June 2024. A further eight action items are due in September 2024, and the final five items are due in January 2025.

The process in addressing effectiveness deficiencies is distinct from the process in addressing technical compliance deficiencies (related to the adequacy of the country’s AML/CFT laws and policy frameworks).

“The October 2023 FATF plenary formally re-rated 18 of South Africa’s 20 deficiencies, based on the progress made by the South African authorities in the two-year period following the 2021 mutual evaluation. Of these, 15 were upgraded to a point where they are no longer deficient, as 14 Recommendations are now fully or largely compliant, and one Recommendation was deemed to be inapplicable to South Africa.

“Following these re-ratings, South Africa is now deemed to be fully or largely compliant in 35 of the 40 FATF Recommendations, including in five of the six core FATF Recommendations. South Africa will apply for further re-ratings of technical compliance deficiencies, for the consideration of the October 2024 FATF Plenary,” National Treasury said. –SAnews.gov.za