FATF South Africa: 5 Powerful Steps to Delisting Success in 2025
The FATF South Africa journey from grey listing to full compliance marks a turning point in the nation’s financial governance. In February 2023, the Financial Action Task Force (FATF) placed South Africa on its grey list due to strategic deficiencies in its anti-money laundering (AML) and counter-terrorist financing (CFT) frameworks.
Two years later, the country stands on the brink of delisting, having completed all 22 action items in the FATF Action Plan. This FATF South Africa success story reflects a coordinated national effort across government, financial institutions, and law enforcement.
For more on financial reforms in Africa, visit SABC News’ financial coverage.
Background: Why Was South Africa Grey-Listed?
The 2023 FATF Decision
The FATF South Africa grey listing in February 2023 was a wake-up call for the nation. FATF identified significant weaknesses in South Africa’s ability to combat money laundering and terrorist financing, particularly in sectors like real estate, legal services, and virtual assets.
Key concerns included:
- Inadequate supervision of financial institutions
- Low conviction rates for financial crimes
- Gaps in beneficial ownership transparency
- Weak enforcement of AML/CFT regulations
The decision triggered capital flight, increased borrowing costs, and reputational damage, pushing the government to act swiftly.
Impact on the Economy and Financial Sector
The FATF South Africa grey listing had immediate economic consequences. International banks increased due diligence on South African transactions, leading to delays and higher fees.
Foreign direct investment (FDI) slowed, and credit rating agencies downgraded their outlook for the country. According to the South African Reserve Bank (*source here*), the cost of being on the grey list could have reached ZAR 150 billion (USD 8 billion) over two years.
On our AML compliance hub, we analyze how grey listing affects emerging economies and what recovery looks like.
Five Powerful Steps to Delisting Success
Step #1: Legislative and Regulatory Overhaul
The first major step in the FATF South Africa recovery plan was a comprehensive reform of the legal framework. The government amended the Financial Intelligence Centre Act (FICA) and introduced the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill.
These changes strengthened reporting requirements, expanded the scope of regulated entities, and introduced stricter penalties for non-compliance.
The National Treasury also established a dedicated AML/CFT coordination unit to ensure inter-agency alignment.
Step #2: Enhanced Supervision and Enforcement
To address FATF’s concerns about weak enforcement, South Africa empowered its financial supervisors. The Financial Sector Conduct Authority (FSCA) and Prudential Authority (PA) increased on-site inspections and imposed significant fines on non-compliant institutions.
The Hawks (Directorate for Priority Crime Investigation) launched specialized financial crime units, resulting in a 40% increase in prosecutions related to money laundering.
“We are not just checking boxes — we are building a culture of compliance,” said the Minister of Finance.
Step #3: Beneficial Ownership Transparency
One of the most critical reforms under the FATF South Africa action plan was the creation of a central beneficial ownership register. This database allows authorities to identify the real owners behind companies and trusts, closing a major loophole used for illicit financial flows.
The register is accessible to law enforcement and financial institutions, with strict data protection safeguards.
This move aligns South Africa with global standards and strengthens investor confidence.
Step #4: Strengthening Financial Intelligence
The Financial Intelligence Centre (FIC) underwent a major transformation. It adopted advanced data analytics and artificial intelligence to detect suspicious transaction patterns more efficiently.
Partnerships with banks and fintech firms improved the quality and timeliness of reports. The number of suspicious transaction reports (STRs) submitted annually rose from 180,000 to over 350,000.
This enhanced intelligence capability has become a cornerstone of the FATF South Africa success story.
Step #5: International Cooperation and Mutual Evaluation
South Africa actively engaged with FATF and its regional body, the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). It hosted multiple technical missions and peer reviews to demonstrate progress.
The country also signed new mutual legal assistance treaties (MLATs) with key partners to improve cross-border investigations.
This openness and transparency reassured FATF that the reforms were sustainable and not just temporary fixes.
Public and Economic Response
Restoring Investor Confidence
The FATF South Africa delisting process has already begun to restore investor confidence. Stock markets reacted positively to news of compliance completion, and international banks have started easing transaction restrictions.
“South Africa is back on the radar for global investors,” said a senior economist at Standard Bank. “Delisting will be a major boost to economic recovery.”
Civil Society and Public Awareness
Civil society organizations have praised the government’s efforts but warn against complacency. “Compliance is not a one-time event — it’s an ongoing process,” said a spokesperson for Corruption Watch.
Public awareness campaigns have been launched to educate citizens about financial crime and the importance of transparency.
The success of the FATF South Africa initiative shows that political will, when combined with technical expertise, can overcome even the toughest international challenges.
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Image 1: South African financial officials in a meeting on FATF compliance
Keywords for image: FATF South Africa, financial compliance, AML reforms, government meeting
Image 2: Protesters outside government building demanding financial accountability
Keywords for image: FATF South Africa, financial accountability, anti-corruption protest, public trust
Source of the article: https://www.sabcnews.com
