South Africa is attempting to exit the Financial Action Task Force (FATF) grey list by targeting full compliance by mid-2025. However, despite significant attempts made by the nation there are loopholes that prevent full compliance with FATF standards.
The country has significantly strengthened its anti-money laundering (AML) and counter-terrorist financing policies following FATF’s original evaluation and subsequent follow-up report in 2023, issues like casino licensing and regulation persist. The most recent report by the task force praised the steps taken by the nation regarding the policies.
National Treasury of the nation has revealed that an onsite evaluation by the FATF Africa Joint Group can be expected as early as May 2025. That is if the nation addresses the remaining recommendations by the task force.
What lies ahead?
While a positive assessment could result in the removal from the FATF grey list by June 2025, failure to meet the force’s criteria in the next reporting cycle could cause extension of the status till at least October 2025. If the status is extended, it would have financial repercussions and hurt local businesses.
Inclusion in the grey list for a nation has wide impacts on their financial ecosystem. This includes banks and financial institutions of the country facing additional scrutiny on transactions, which ultimately leads to slower transaction processing times. Such scrutiny has negative impact of industries like gambling, which rely on frequent high-value deposits and withdrawals.
Another unresolved FATF recommendation that is underlying involves tightening the timeframe for reporting suspicious transactions. The current regulations mandate a 15-day reporting timeframe for suspicious transactions, which according to the FATF is an overly lenient period. The FATF believes that the existing timeframe could possibly weaken the effectiveness and speed of potential AML action.
In addition, casino regulation and licensing are also among one of the concerns. Inconsistent AML requirements across South Africa’s provinces, some requiring rigorous checks while others do not, make casinos highly susceptible to money laundering since they deal in large cash transactions and often provide anonymity.
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