National Treasury said on Friday it expected increased monitoring that comes with being greylisted to have limited impact on financial stability and costs of doing business with South Africa.
It argued that the costs of increased monitoring would be substantially lower than the long-term costs of allowing South Africa’s economy to be contaminated by the flows of proceeds of crime and corruption.
Government noted the Financial Action Task Force’s (FATF’s) decision to list South Africa as a “jurisdiction under increased monitoring”, or more commonly referred to as FATF’s “grey list”.
This decision was made at the FATF Plenary meeting, which took place in Paris, France earlier on Friday.
Following engagements with FATF, Treasury assessed that the country needed to make further and sustained progress in addressing the eight areas of strategic deficiencies related to the effective implementation of South Africa’s Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) laws.
Treasury said the country was expected to address these deficiencies by no later than the end of January 2025 and it noted that there were no items on the action plan that related directly to the preventive measures in respect of the financial sector. It argued that this reflected the significant progress in the application of a risk-based approach to the supervision of banks and insurers.
COMPREHENSIVE AND COLLABORATIVE APPROACH
Meanwhile, the Democratic Alliance (DA) described the FATF’s decision as a damning indictment of the country’s criminal justice system and government's inability to combat financial crimes such as money laundering and terrorism financing.
DA Shadow Minister of Finance Dr Dion George said this situation had arisen primarily owing to the inadequacy of the country’s legal framework and the failure of the authorities to prosecute those responsible for such offenses.
He noted that the gravity of the situation required that the country’s top priority must be to take swift action to restore its reputation and regain the trust of the global community so that South Africa can exit the greylist as soon as possible.
Government must take a comprehensive and collaborative approach to address the remaining concerns of FATF by taking coordinated action across departments and institutions - from the prosecuting authorities to the Hawks, the Financial Intelligence Centre, the Department of Home Affairs, police, South African Revenue Service, and others, added George.
He also said government must commit to rebuild institutional capacity, processes and systems in key parts of the supervisory, investigation and prosecution services,
“The DA will put pressure on government to work closely with financial institutions and the security cluster to fulfil FATF's remaining recommendations and send a clear message that our country will not act as a conduit for illicit financial activities,” he said.
ActionSA director of policy Johann Krige said FATF’s decision was a devastating development that will further harm South Africa’s ailing economy and further compound the unemployment crisis.