National Treasury does not expect South Africa to get off the grey list before June next year, in accordance with the deadlines set in the Action Plan drawn up by the Financial Action Task Force (FATF) in 2023.
Treasury this week issued a statement in response to the outcomes of the FATF’s Plenary meetings held between 26 and 28 June in Singapore.
Some media reports created the impression that the FATF could have decided to remove South Africa from the grey list last month. As Treasury’s statement explained, the Plenary did not discuss removing South Africa from the grey list but focused on the progress the country has made in addressing the items on the Action Plan.
When the FATF grey-listed South Africa at its February 2023 Plenary meetings, it adopted a jointly agreed Action Plan containing 22 Action Items linked to the eight strategic deficiencies identified in the country’s anti-money laundering and combating terrorism financing regime. South Africa must address all 22 Action Items to exit the grey list.
The Action Plan contains deadlines by which South Africa must have addressed the 22 items. The final deadline is January 2025.
The January 2025 deadline is a general guide on the earliest time that South Africa can be expected to have addressed all the Action Items, Treasury said.
Once all the Action Items have been addressed, the country must confirm its progress via an onsite visit by the FATF’s Africa/Middle East Joint Group. If the FATF Plenary determines in February 2025 that South Africa has addressed or largely addressed all 22 Action Items, it will schedule an onsite visit of the Joint Group in April/May 2025 to confirm that assessment and make a recommendation to the June 2025 FATF Plenary to remove the country from the grey list.
If any of the Action Items remain unaddressed by the January 2025 deadline, the country will be required to continue reporting to the FATF every four months until all the deficiencies have been addressed.
At its Plenary in February, the Joint Group confirmed that South Africa had addressed or largely addressed five of the 22 Action Items.
Read: Treasury: tough challenge to tick off all the items on FATF’s Action Plan
The June Plenary adopted a report by the Joint Group confirming that South Africa has addressed or largely addressed a further three Action Items in accordance with the specified deadlines. This means South Africa has 14 outstanding items to address.
Treasury said it was “satisfied” with the outcome of the Plenary.
The items that have now been addressed or largely addressed relate to:
- The legal provisions criminalising terrorist financing and underpinning South Africa’s targeted financial sanction regimes.
- Increasing the use of financial intelligence from the Financial Intelligence Centre to support money-laundering investigations.
- The introduction of risk-based tools to identify higher-risk designated non-financial businesses and professions.
- Updating the country’s Terror Financing National Risk Assessment.
- Increasing the resources and capacity of relevant authorities.
Two reporting deadlines left
South Africa has two remaining reporting cycles, in September 2024 and January 2025, to address the outstanding Action Items.
South Africa must address or largely address nine of the outstanding Action Items in the September 2024 reporting cycle. The final five Action Items are due in January 2025.
Many of the 14 outstanding items are due in the last two reporting cycles because South Africa must demonstrate that the improvements made are sustained over successive reporting periods, Treasury said.
National Treasury said although South Africa is on track to address the outstanding Action Items, it will be a tough challenge to address all of them by February 2025. All relevant agencies and authorities will need to continue to demonstrate significant improvements, and that these improvements are being sustained and are effective.
These comments repeat what Treasury said following the FATF’s Plenary in February.
The Minister of Finance has been leading a process within government to ensure that South Africa addresses all the Action Items by February 2025, to enable South Africa to exit greylisting by June 2025, Treasury said.
