Rédaction Africa Links 24 with Peter Fabricius
Published on 2024-03-08 11:10:13
South Africa, known as Africa’s most sophisticated economy, finds itself struggling to get off the Financial Action Task Force’s (FATF) grey list due to its shortcomings in combating money laundering and terrorist financing. Despite other African countries like Botswana, Mauritius, Morocco, and Zimbabwe successfully getting off the list, South Africa continues to face challenges in this regard. The question arises whether political will plays a significant role in this, especially considering South Africa’s prominence as the continent’s financial hub.
FATF, an intergovernmental body that evaluates countries’ capabilities in combating illicit financial activities, put South Africa on its grey list a year ago. There were initial predictions that South Africa would be removed from the list in just over 12 months, but analysts projected a longer timeline of two to five years. The country’s Treasury recently acknowledged that while progress had been made in reforming anti-money laundering measures, South Africa would remain on the grey list for at least another year. The Treasury disclosed that they were working to address the five outstanding technical deficiencies highlighted by FATF by the end of October, with some analysts estimating that South Africa might not be delisted until 2026.
The warning signs were evident towards the end of 2022, and despite the introduction of urgent legislation to avoid greylisting, South Africa found itself on the list in February 2023. This listing was seen as a blow to the country’s reputation and an economic setback that could potentially deter foreign investment and increase business costs. FATF pointed out lax anti-money laundering measures in South Africa that allowed illicit funds to flow without triggering alarms in financial institutions. These flows could potentially finance terrorist activities. Furthermore, FATF criticized South Africa’s lack of commitment in prosecuting individuals linked to State Capture.
The country’s progress in addressing these deficiencies will be evaluated again in February 2025. Treasury acknowledged the challenging task of getting off the grey list and emphasized the need for significant efforts from all relevant South African authorities. At yet another FATF plenary in Paris, South Africa was recognized for making some progress but was urged to enhance supervision of professionals like lawyers and accountants to prevent benefiting from illicit financial flows.
Terrorism funding remains a major concern for South Africa, with FATF giving the country low scores in countering terrorist financing. In 2022, the United States imposed sanctions on individuals for financing Islamic State in Africa, but South Africa took no action against them. In contrast, other African countries like Zimbabwe, Botswana, Morocco, and Mauritius successfully navigated the process of getting off the grey list by demonstrating a stronger commitment to combating money laundering and terrorist financing.
Experts believe that South Africa’s resistance to acting against terrorism on its soil, which some officials view as a Western obsession without real justification, has hindered its efforts to get delisted. The lack of credible prosecutions under terrorist legislation, compounded by structural damage from State Capture, has further delayed South Africa’s removal from the list.
In conclusion, while South Africa continues to grapple with the challenges of getting off the FATF grey list, experts emphasize the need for stronger political will, collaboration, and concerted efforts across various sectors to address deficiencies in combating money laundering and terrorist financing. The path to delisting may require significant reforms, successful prosecutions, and sustained commitment to ensure a sustainable and effective anti-financial crime framework in the country.
Read the original article on Daily Maverick
