National Treasury: SA triumphs against money laundering deficiencies; celebrates removal of technical compliance gaps

South Africa has received praise from the Financial Action Task Force (FATF) for significant progress in addressing technical compliance issues within its anti-money laundering system. The latest follow-up report, “South Africa: Follow-up Report on Technical Compliance Re-rating,” released on November 28, 2023, reveals commendable advancements in rectifying the 20 deficiencies identified in the 2021 FATF Mutual Evaluation Report.

The FATF Plenary, on October 27, 2023, re-rated 18 of the 20 deficiencies, upgrading fifteen to no longer deficient status. This achievement leaves South Africa fully or largely compliant in 35 of the 40 FATF Recommendations, showcasing remarkable improvement. The re-ratings followed legislative amendments enacted at the end of 2022, including the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act.

Despite the positive strides, South Africa remains under the FATF “greylist” due to effectiveness deficiencies outlined in the Action Plan agreed upon in February 2023. Overcoming these shortcomings is crucial for South Africa to exit the greylist, with progress monitored by the FATF Africa/Middle East Joint Group. Cabinet and the Justice, Crime Prevention and Security Cluster have overseen the Action Plan’s implementation, with the Interdepartmental Committee on AML/CFT leading the efforts.

The South African authorities have reported progress against the Action Plan, but challenges remain. Key action items include demonstrating sustained increases in outbound MLA requests, improving risk-based supervision of DNFBPs, strengthening supervisory capacity, and enhancing identification, investigation, and prosecution of money laundering and terrorism financing activities.

The FATF expects countries to address most technical compliance deficiencies within three years, and South Africa aims to achieve this by the next FATF Follow-Up report in October/November 2024. While positive momentum is evident, sustained efforts are needed to ensure lasting improvements and secure removal from the greylist.