Has SA done enough to avoid joining the FATF grey list?

It’s a loaded question, and a lot has been done such as President Ramaphosa signing two amendments to our AML and anti-terrorism laws in December last year.

The real question, however, is whether these amendments are going to translate into actions being taken. Will we see prosecution, as the National Prosecuting Authority (NPA) is given increased power to prosecute, and what about political buy in?

On the one hand, we’re amending legislation, while on the other, we have widespread corruption running wild. We may have a legislative framework in place, but the challenge now is our ability to enforce the legislation and expertise to drive it.

It may just not be enough (yet) to avoid the Financial Action Task Force (FATF) grey list. South Africa will need to follow in the footsteps of the likes of neighbour, Mauritius, who showed a strong, national commitment to preventing money laundering. They did a lot of the right things and were able to get off the grey list within two years – but they could not escape it initially and ended up better off for joining it. South Africa may also need to learn the hard way to improve anti-money laundering and Countering of Financial Terrorism measures.

Let’s look to Turkey for some further inspiration. Added to the FATF grey list in October 2021 (the first of the G20 countries; making South Africa a potential second), Turkey has been in a ‘high-level political commitment’ to work with the FATF to improve its AML/CFT regime. Turkey has taken certain steps to enhance this commitment such as increasing human resources to target terrorist financing and increasing on-site inspections across sectors, on a risk-basis.

It is focusing on auditing non-profit organisations, while ensuring this supervision is in line with FATF standards and doesn’t disrupt or discourage legitimate NPO activity such as fundraising. Turkey is also setting out clear and measurable responsibilities and performance objectives, along with metrics for the authorities responsible for pursuing terrorism financing criminal cases and recovering criminal assets. Statistics will be used to update risk assessments and inform policy.

These are great learnings as to what South Africa could do to further prove it is on a path towards decreasing money laundering and that it is striving to be an unattractive destination for terrorist financing.

The FATF will make its decision by 24 February 2023 when it meets in Paris for deliberations. Hopefully, there will be no love lost for South Africa’s efforts so far. We do have major corruption concerns and a difficult history to recover from, and this scare from the FATF or its oversight should we become a member of the grey list, will ultimately help South Africa to do what needs to be done to be a safer, competitive, and law-abiding investment destination on the global stage.

James George is compliance manager at Compli-Serve SA.