South Africa’s official removal from the Financial Action Task Force (FATF) grey list marks an important milestone for the country’s financial system, but experts warn that stronger prosecutions and more reforms lie ahead if it is to maintain this status.
Vincent Gaudel, financial crime compliance expert at LexisNexis, says even though the delisting is “a great outcome” and a recognition of South Africa’s progress, continued momentum is now key.
In an interview with Moneyweb on Friday, minutes after the announcement, Gaudel noted that all stakeholders in South Africa have shown what they are capable of, but continuous delivery on these positive outcomes will now need to be sustained.
33 months to removal
South Africa was put on the grey list in February 2023 after the financial watchdog found serious strategic weaknesses in its anti-money-laundering and counter-terrorism-financing (AML/CFT) framework.
It meant South Africa’s technical compliance with many FATF recommendations was deficient and its effectiveness to prevent, detect, investigate and prosecute financial crime failed to meet international standards.
South Africa’s removal from the grey list took 33 months. In June this year, the FATF found the country had substantially completed 22 action items in its action plan, paving the way for the removal.
Successful prosecutions key
“South Africa now needs continued use of those tools to achieve outcomes – and those outcomes are to put bad guys behind bars, and to confiscate and recover assets,” Gaudel stresses.
The FATF’s next evaluation round begins soon, with an on-site visit scheduled for April 2027.
Ahead of that, assessors will request detailed regulatory evidence, case statistics and proof of prosecutions.
Gaudel says the FATF has also introduced a “slightly different methodology” for compliance.
“Potentially, there could be new challenges, like assessing the effectiveness of non-financial businesses as well, which will be increasingly on their radar.”
He adds that these sectors are perceived as gatekeepers and are sometimes the “weak spots” in compliance.
“There will be dedicated assessments on these sectors and this is something that will need to be anticipated by the authorities.”
‘A milestone, not the finish line’
The Banking Association of South Africa describes the FATF’s decision as “an important data point,” proving that South Africa can remove barriers to business and investment “through action, not only policy announcements”.
However, it warns that the country’s capacity to fight financial crime “will continue to be monitored”, with the next review beginning as early as in 2026.
Edward Kieswetter, Commissioner of the South African Revenue Service (Sars), emphasises that this is a long-term journey and the delisting “is not a finish line but a milestone”.
“This delisting is a vote of confidence in South Africa’s progress, but it is not an end to our vigilance. The fight against financial crime and corruption is a continuous one.”
Kieswetter adds that Sars has improved its financial intelligence-gathering capabilities, trained officials in anti-money laundering methods, and strengthened investigations into tax and customs crimes involving complex laundering and terror-financing schemes.
Patricia Stock, CEO of the South African Institute of Chartered Accountants (Saica), says the country’s removal from the grey list demonstrates what can be achieved through coordinated action and shared accountability.
“The reforms have not only met international standards but have strengthened the foundations of integrity and transparency within our financial system,” she says.
Stock stresses that Saica will keep working with the Financial Intelligence Centre (FIC), National Treasury and other supervisory bodies to sustain progress.
More ‘prosperous’ times ahead
Kevin Lings, chief economist at Stanlib, says South Africa’s exit was widely anticipated, but there had been some concern that it might be delayed due to a lack of prosecutions of serious and complex money-laundering crimes, as well as the need to increase the effective identification, investigation and prosecution of the full range of terror-financing activities.
He notes that while these shortcomings didn’t prevent the delisting “they still need to be improved”.
Lings adds that the 33-month timeframe for South Africa’s removal from the list was in line with international norms.
“Being on the grey list added a layer of cost to the complexity of doing business in South Africa, especially in relation to any offshore transactions.
“It also undermined investor sentiment and has been an embarrassing position for the authorities, given that South Africa holds the presidency of the G20 in 2025.”
Lings believes exiting the list will provide a much-needed boost to investors, business and household confidence, helping to make 2026 a more prosperous year for the South African economy.
Regulatory improvements
Webber Wentzel notes that during the greylisting period, the effects of being greylisted were felt as foreign counterparties applied greater scrutiny to our domestic institutions.
The cost of increased compliance affected local institutions, while non-compliance resulted in hefty administrative penalties imposed by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority.
“Compliance costs, with enhanced AML/CFT processes, are now standard operating practice and will remain, irrespective of delisting,” it adds.
However, with South Africa now off the list, it expects foreign investment to increase, while maintaining the enhanced scrutiny and compliance standards that were developed during the greylisting period.
A positive legacy, says Webber Wentzel, is the ongoing commitment by authorities – particularly the National Prosecuting Authority and the FIC – to demonstrate effective measures to identify and prosecute financial crime.
Greylisting was not ‘the only obstacle’
Philip Robotham, head of the South Africa client group at Schroders, says the greylisting made it harder for foreign investors to do business because of enhanced due diligence requirements.
“Exiting the grey list should make it cheaper and more efficient to do business [in South Africa],” he says.
“This, together with the steps taken to correct various deficiencies and better detect financial crime … should make the country a more attractive destination for capital.”
Robotham cautions however that the greylisting was by no means “the only obstacle” to attracting foreign capital.
Yet it is still a step in the right direction to improving investor confidence alongside other positive developments such as ongoing reform progress, energy stability and public-private sector collaboration. – monetweb.co.za
