On 24 February 2023, the Financial Action Task Force (FATF) took the decision to include South Africa on its "grey list", thereby classifying it as a jurisdiction under increased monitoring. This decision follows the mutual evaluation report published by the FATF in 2021(2021 Report) in which South Africa's compliance with the FATF 40 Recommendations (Recommendations) and the level of effectiveness of South Africa's anti-money laundering (AML) and counter-terrorist financing (CTF) system were assessed.
The 2021 Report included 67 recommendations (action points) and highlighted several deficiencies in its assessment of the country. South Africa was given one year to provide evidence of its efforts to adhere to the FATF's recommendations, failing which the country would face the risk of being greylisted.
This article discusses the background to greylisting and the various role players, South Africa's shortcoming, the reasons for being placed on the grey list, the actions taken to prevent (albeit unsuccessfully) being placed on the grey list, the next steps and actions required to be successfully lifted from the grey list, and, finally, the effects of greylisting on investment managers and investors, both local and abroad, from a legal and practical perspective.
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Read the original publication at Cliffe Dekker Hofmeyr.