SA is in grave danger of being added to a grey list of countries deemed as having insufficient measures in place to combat money laundering and terrorist financing – but the National Treasury says it is confident the country can perform a ‘miracle’ and avoid being ranked alongside Syria and Myanmar.

Treasury Acting DG Ismail Momoniat told Business Day greylisting is not a fait accompli and the country could succeed in remedying its regulatory deficiencies before the stipulated deadline.

The Paris-headquartered Financial Action Task Force (FATF) gave SA 18 months to address specific shortcomings in its ability to prevent financial crimes, which were outlined in a mutual evaluation report published in October 2021.

The report was prepared by a team of 10 assessors drawn from FATF, the IMF and the Eastern and Southern Africa AntiMoney Laundering Group.

The mutual report found SA compliant with only three of FATF’s 40 benchmark recommendations to combat illicit financial activity while it was non-compliant with five, partially compliant with 15 and largely compliant with 17.

Due to SA’s poor showing, the report gave SA a first deadline of October 2022 to address three of the 40 benchmark recommendations – these relate to terrorist financing, customer due diligence and reporting suspicious transactions – as well as 11 immediate outcomes covering areas such as international co-operation, supervision, beneficial ownership and money laundering prosecutions.

Should SA fail to demonstrate sufficient progress in addressing its deficiencies in combating money laundering and terrorist financing by the October 2022 deadline, FATF could recommend SA be placed on a grey list of countries that are subject to increased financial scrutiny.

Full Business Day report