One step off the greylist, but who’s watching the watchdogs?

BY ALL accounts, South Africa has come a long way since February 2023, when it was placed on the Financial Action Task Force (FATF) greylist over concerns about weak enforcement mechanisms and a lack of political will to combat high-level corruption.

Now, nearly two years down the line, the country is on the cusp of delisting after “substantially completed” all 22 action items set out by the global watchdog.

The announcement from the FATF Plenary in Strasbourg, France, marked a significant milestone for South Africa’s beleaguered financial sector. The country now awaits an on-site verification visit — a final step before potential delisting at the next FATF Plenary in October 2025.

“This is not just about ticking boxes,” National Treasury said in a recently released statement. “This is about rebuilding institutions hollowed out during years of state capture, and restoring credibility to our financial systems.”

Yet while the technical progress has been lauded internationally, domestic critics warn that celebration may be premature — and that complacency could unravel everything.

South Africa’s greylisting in 2023 was more than a reputational blow; it was a financial reckoning. Banks faced higher correspondent banking costs, foreign investment slowed, and businesses were forced to navigate an increasingly complex and costly regulatory environment.

The legacy of state capture — under which law enforcement agencies were deliberately weakened — made the path to compliance long and arduous. But according to the FATF’s latest communiqué: “South Africa has demonstrated a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of terror financing activities in line with its risk profile.”

That turnaround, according to officials, was only possible due to the relentless work of key institutions such as the Directorate for Priority Crime Investigation (DPCI — alias Hawks), the State Security Agency (SSA), and the National Prosecuting Authority (NPA).

“Without their commitment, we would still be floundering,” read the Treasury statement. “These are the same institutions that were targeted during the Zuma era. To see them rise again is nothing short of remarkable.”

The FATF has confirmed that South Africa has met the technical requirements for delisting, but the final verdict rests with the FATF Africa Joint Group, which is set to conduct an on-site visit prior to the October 2025 Plenary. “The Joint Group will verify that implementation of AML/CFT reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation in the future,” stated the FATF on June 13.

National Treasury confirmed that preparations for the visit were already underway.

While Treasury paints a picture of institutional renewal, opposition parties remain deeply skeptical. The DA, now part of the Government of National Unity (GNU), has cautiously welcomed the FATF’s upgrade of South Africa’s progress but issued a warning against any complacency that could derail the country’s full removal.

“While this is an important step, the DA cautions the NPA and our financial regulators against complacency,” DA Deputy Spokesperson on Finance Wendy Alexander said in a statement. “Exiting the greylist remains subject to a site visit by the FATF ahead of the body’s next plenary in October.”

Alexander stressed that further delays would only deepen the damage. “The longer South Africa stays on the greylist, the harder it will be for our banks to do business both domestically and internationally,” she warned, adding that a one-off effort would not be enough. “Exiting and staying off the greylist requires not once-off window dressing, but sustained change and implementation.”

South Africa shares the spotlight with several African nations making strides against financial crime. Mali and Tanzania have been officially delisted from the FATF greylist, while Nigeria, Mozambique, and Burkina Faso were also recognised for having substantially completed their respective action plans.

“This isn’t a zero-sum game,” Treasury said. “When one African country makes progress, it strengthens the entire continent’s reputation as a safe place for investment and trade.”

But as South Africa awaits the FATF’s critical site visit, the message is clear: progress is fragile, and only relentless action — not celebration — will ensure the country finally sheds its greylist status for good.

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