South Africa Faces Uphill Battle to Exit FATF Grey List by 2025

Finance Minister Enoch Godongwana is leading government efforts to ensure all Action Items are addressed by February 2025, targeting a June 2025 exit from the grey list.

National Treasury has acknowledged the significant challenge South Africa faces in addressing the remaining 14 Action Items required to exit the FATF grey list by February 2025. Despite being on track, the task remains tough.

This statement follows the Financial Action Task Force’s (FATF) latest update on South Africa’s progress, published on 28 June 2024 after the FATF Plenary meetings in Singapore.

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

South Africa was placed on the FATF grey list in February 2023 with a jointly agreed Action Plan containing 22 Action Items linked to deficiencies in its Anti-Money Laundering and Combating of the Financing of Terrorism (AML/CFT) regime. The country must address all 22 Action Items to exit the grey list, with deadlines spanning from January 2024 to January 2025.

“National Treasury is satisfied with the outcomes of the FATF Plenary meetings. Given the FATF process, Treasury does not expect South Africa to exit grey listing before June 2025, as per the Action Plan deadlines,” National Treasury said.

Finance Minister Enoch Godongwana is leading government efforts to ensure all Action Items are addressed by February 2025, targeting a June 2025 exit from the grey list.

The FATF Plenary did not discuss South Africa’s delisting but focused on the progress in addressing the 17 outstanding Action Items. The FATF Africa/Middle East Joint Group’s report confirmed that South Africa has largely addressed three more Action Items, leaving 14 to tackle from the original 22.

The January 2025 deadline marks the earliest potential completion date for all Action Items. Once all items are addressed, a FATF Joint Group onsite visit will confirm progress, leading to a possible recommendation for delisting at the June 2025 FATF Plenary.

If any Action Items remain unaddressed by January 2025, South Africa will continue reporting to the FATF every four months until all deficiencies are resolved.

At the June 2024 meetings, the FATF Plenary confirmed that eight of the 22 Action Items are now addressed or largely addressed. These items include legal provisions against terrorist financing, increased use of financial intelligence, and enhanced resources and capacity for relevant authorities.

“South Africa is left with two reporting cycles in September 2024 and January 2025. Many of the 14 outstanding items are due in these cycles because sustained improvements must be demonstrated over successive reporting periods.

“In the next cycle, South Africa must address or largely address nine of the outstanding Action Items due in September 2024. The final five Action Items are due in January 2025,” National Treasury said.