SA reports progress in addressing anti-money laundering systems


The South African government says it has made progress in addressing the 20 technical compliance difficulties in its anti-money laundering system that led to the February grey listing by the Financial Action Task Force (FATF).

This is according to the National Treasury following the release of the Financial Action Task Force’s technical compliance re-rating follow up report.

“On 27 October 2023, the FATF Plenary formally re-rated 18 of the 20 deficiencies, based on the progress made by the South African authorities in the two-year period following the 2021 mutual evaluation (MER). Of these, fifteen were upgraded to be no longer deficient, as 14 recommendations were now fully or largely compliant, and one recommendation was rated as not being applicable to South Africa.

“Following these re-ratings, South Africa is now deemed to be fully or largely compliant (or not deficient) in 35 of the 40 FATF Recommendations, including in five of the six core FATF Recommendations. This means that South Africa is left with five deficiencies in technical compliance (including three of the 18 which were upgraded from non-compliant to partially compliant), and two which remain as partially compliant since 2021,” the statement read.

National Treasury emphasised that the FATF follow up report does not “address the progress made by South Africa to improve the effectiveness deficiencies” that were identified in the mutually agreed upon Action Plan following South Africa’s grey listing by FATF earlier this year.

“Overcoming the effectiveness deficiencies is essential for South Africa to exit the FATF “grey list”.

“South Africa’s progress against its Action Plan is reviewed by the FATF Africa/Middle East Joint Group (FATF AME JG). The Joint Group meets every four months, where South Africa is expected to report on progress in addressing the 22 action items in the Action Plan,” National Treasury said.

The department hashed out the steps that government has taken to implement the Action Plan.

These steps include the establishment of the Interdepartmental Committee on Anti-Money Laundering and Combating of Terrorism Financing (IDC-AML/CFT) that is chaired by the Director-General of National Treasury.

The IDC-AML/CFT includes government departments and agencies including the:

South African Police Services’ Directorate for Priority Crime Investigation (the Hawks)
National Prosecuting Authority
Special Investigating Unit
State Security Agency
Financial Intelligence Centre
South African Reserve Bank
Financial Sector Conduct Authority
Department of Justice and Constitutional Development
Companies and Intellectual Property Commission
South African Revenue Service

“Cabinet has been closely monitoring progress by the IDC-AML/CFT and government departments and agencies, as noted in the Cabinet statement of 18 October 2023.

“Through the IDC-AML/CFT, South Africa has reported on its progress against the Action Plan at two AME Joint Group meetings in May and September 2023, and is currently preparing to engage on a third report to the Joint Group. Completing the implementation of the Action Plan is essential for South Africa to exit the FATF grey list,” Treasury said.

On the action items set out by the FATF following South Africa’s grey listing, Treasury said FATF’s October Plenary statement noted that South Africa has recorded “positive progress”.

“However, addressing the remaining actions within the agreed timelines will require a significant effort from all the relevant South African authorities. In doing so, the South African authorities will also need to demonstrate that the improvements are sustainable, before South Africa will be deemed by FATF to have adequately addressed all the action items,” Treasury concluded.

Government expects to address all the deficiencies identified by the FATF by early 2025.

In February 2023, the FATF grey listed South Africa based on a 2019 evaluation conducted and a 2021 report. In 2021, South Africa was put under a one year observation period, allowing the country to address 67 of the recommended actions. The report identified South Africa as a country with strategic deficiencies in combatting money laundering and stopping the flow of finance to terror groups.

FATF is a global inter-governmental body promoting policies and setting international standards to combat money laundering, terrorist financing and financing the proliferation of weapons of mass destruction.