South Africa is listed on the FATF list of jurisdictions under increased monitoring or “Grey List“. According to the FATF, “South Africa has a solid legal framework for combating money laundering and terrorist financing but significant shortcomings remain”.
In particular, it noted that “the country needs to pursue money laundering and terrorist financing in line with its risk profile, including by proactively seeking international cooperation, detecting and seizing illicit cash flows, and improving the availability of beneficial ownership information. Authorities need to make better use of the financial intelligence products provided by South Africa’s financial intelligence unit. The country should also improve the application of the risk-based approach by obligated entities and supervisors. The assessment was led by the International Monetary Fund.”
Since February 2023, when South Africa made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, South Africa has taken steps towards improving its AML/CFT regime including by addressing technical deficiencies in its targeted financial sanction regime related to proliferation financing. However, the FATF noted that South Africa should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating a sustained increase in outbound MLA requests that help facilitate ML/TF investigations and confiscations of different types of assets in line with its risk profile; (2) improving risk-based supervision of DNFBPs and demonstrating that all AML/CFT supervisors apply effective, proportionate, and effective sanctions for noncompliance; (3) ensuring that competent authorities have timely access to accurate and up-to-date BO information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to BO obligations; (4) demonstrating a sustained increase in law enforcement agencies’ requests for financial intelligence from the FIC for its ML/TF investigations; (5) demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile; (6) enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes, in line with its risk profile; (7) updating its TF Risk Assessment to inform the implementation of a comprehensive national counter financing of terrorism strategy; and (8) ensuring the effective implementation of targeted financial sanctions and demonstrating an effective mechanism to identify individuals and entities that meet the criteria for domestic designation.
In August 2022, following a request for technical assistance from the country’s authorities, the EU Global Facility on AML/CFT conducted a scoping mission to South Africa where the team discussed and assessed the request for support. The training and activities that were agreed upon with local authorities have since been delivered to help South Africa rectify the strategic deficiencies in its national anti-money laundering and counter-terrorist financing framework. as defined under the Fourth and Fifth Anti-Money Laundering Directives.