South Africa is nearing the end of its time on the Financial Action Task Force (FATF) greylist, following the successful completion of all 22 recommended action items related to anti-money laundering (AML) and counter-terrorist financing (CTF).
This milestone comes after the FATF’s Africa Joint Group conducted an on-site inspection in Pretoria to assess the country’s progress, ahead of the FATF plenary in October, where a final decision will be made.
If removed, South Africa will have achieved in 2½ years what many countries struggle to accomplish in a decade, demonstrating the scale and speed of its reforms.
Why the greylisting mattered
South Africa was added to the FATF greylist in February 2023, following concerns about its ability to prevent and prosecute financial crimes. This designation had significant consequences.
“Being on the greylist basically puts you at higher risk as a country,” explains Future Forex CEO, Harry Scherzer. “It becomes very difficult for South African businesses to work with international partners because those partners have to perform extra checks to ensure the money is clean, even when, in 99.99% of cases, it is.”
This additional scrutiny created a barrier for South African firms engaging in global transactions, slowing deals and reducing competitiveness.
Rapid reform: a positive turnaround
Despite the initial setback, Scherzer believes the listing became a catalyst for much-needed change.
“It was a real wake-up call for us,” he says. When it happened, we realised we needed to pick up our socks and actually perform real checks on all businesses, ensuring those involved in illicit and criminal activity are held accountable.”
Since then, South Africa has implemented stricter controls, enhanced oversight, and demonstrated a tangible commitment to financial governance.
“I was very impressed with our financial systems and governance being able to complete all 22 action items within 2.5 years. That’s extremely quick. You have countries on the greylist for a lot longer, and some never make it off at all.”
Are we fully prepared?
Despite this progress, Scherzer notes that challenges remain, particularly around enforcement. “It’s not like we are the best in the world at this,” he says. “But we were far worse, and we’re definitely moving in a positive direction.”
He notes that while the National Prosecuting Authority (NPA) has published encouraging statistics, a gap remains between the reported efforts and notable outcomes.
“To ensure we stay off the greylist, we need to keep improving, especially around complex commercial crimes like racketeering and large-scale money laundering.”
Maintaining momentum
When asked how South Africa can sustain its progress after delisting, Scherzer’s view is clear: it all comes down to mindset.
“The government essentially needs to act as if the country is still on the greylist, even after official removal. This approach will ensure that internal checks remain rigorous and investor confidence continues to grow.”
He warns against any complacency. “If we stop improving, we’ll end up yo-yoing on and off the greylist. That would damage investor confidence and, ultimately, the country’s economy.”
The journey continues
South Africa’s imminent removal from the FATF greylist represents a significant policy and governance shift. However, as Scherzer puts it, the real work begins now.
If South Africa maintains this momentum, the greylisting could prove to have been a necessary and valuable inflexion point - one that led to enduring institutional reform, increased investor confidence, and a more robust financial system.
