South Africa’s inclusion on the Financial Action Task Force’s (FATF) grey list has been a major concern for the country’s financial sector. However, with the latest update from the FATF, it seems the country is making significant progress in addressing its action plan.
The FATF’s recent update reveals that South Africa has addressed 20 out of 22 action items, leaving only two outstanding items to be resolved by June 2025.
These two key items are:
Improving the implementation of targeted financial sanctions: South Africa needs to demonstrate effective implementation of targeted financial sanctions, including freezing assets and prohibiting transactions with designated individuals and entities.
Enhancing the use of financial intelligence: South Africa needs to improve its use of financial intelligence to investigate and prosecute complex money laundering and terrorist financing cases.
The South African government, and regulatory bodies have been working tirelessly to address the strategic deficiencies identified in the country’s Anti-Money Laundering and Counter Financing Terrorism AML/CFT regime. The progress made so far is encouraging, as it has galvanized financial institutions, regulators and law enforcement agencies to work together to combat financial crimes.
“One of the key challenges that South Africa faces in its efforts to combat financial crime is the lack of effective verification and monitoring systems. This is where compliance technology plays a critical role. Automated compliance solutions helps financial institutions to verify customer identities, monitor transactions, and detect suspicious activity in real-time,” says Frank Leonette, CEO of GloRep.
Government’s dependence on companies compliancy is imperative in winning the fight against anti-money laundering tactics, therefore stressing the need for compliant participation of various stakeholders. As a result, companies need to play their parts within the ecosystem, assisting government in winning the fight against this regime.
Compliance technology is specifically designed to support Africa’s fight against financial crime as solutions provide real-time verification of customer identities, beneficial ownership information, and transaction monitoring, enabling financial institutions to detect and prevent complex financial crimes.
Solutions that are designed to enhance risk management by identifying and flagging high-risk customers, transactions, and entities in real-time is needed as this enables proactive risk mitigation and reduces the risk of financial institutions being used for illicit activities.
The use of automated compliance solutions, can help support South Africa’s efforts to combat financial crime and exit greylisting. However, it will require a sustained effort from all stakeholders, including financial institutions, regulators, and law enforcement agencies.
“With the right combination of technology, regulation, and cooperation, South Africa can overcome the challenges posed by greylisting and emerge as a leader in the global fight against financial crime,” Leonette says.