South Africa achieved what can be considered a milestone in financial regulatory history in 2025, as it was finally taken off the FATF greylist.
In 2023, the global regulator of the anti-money laundering (AML) and counter-terrorist financing (CFT) standards, the Financial Action Taskforce (FATF), had put South Africa under a heightened monitoring following the establishment of lapses in its AML/CFT framework.
The delisting was not only a comeback to the global credibility but also a triumph of a grandiose reform agenda that included almost every corner of the financial and regulatory system in the country.
The life of South Africa serves as a good example of how a country can restore investor trust and ensure its financial integrity by taking concerted action, having a political desire, and keeping up with international standards, such as the ones advocated by the FATF and other organisations, like the FinCEN (Financial Crimes Enforcement Network).
Knowledge of FATF GreyList
The FATF grey list (also known as Jurisdictions under Increased Monitoring) lists those countries that have undertaken to address strategic weaknesses in their AML/CFT systems, but fail to realise all FATF guidance.
This list does not mean that there are sanctions, but it has serious reputational and economic consequences.
Global financial institutions and correspondent banks started to impose enhanced due diligence on South African transactions when South Africa was added to the list in 2023.
The grey listing was very effective in alerting the investors and regulators that the country needed closer scrutiny to avoid illegal flow of money.
This could reduce the rate of foreign investment, make it difficult to conduct business across borders, and increase the cost of doing business more expensive.
South Africa was added to the grey list for the following reasons
As disclosed in the FATF mutual evaluation report of 2021, South Africa had a good legal framework, but it had weaknesses in implementation and enforcement. It was grey-listed because of several weaknesses, including:
- Lack of information on the prosecution of money laundering cases.
- Lack of strong oversight of Designated Non-Financial Businesses and Professions (DNFBPs) like real estate agents, accountants, and attorneys.
- Poor positive ownership disclosure of firms and trusts.
- Minor use of financial intelligence to aid in investigations.
- The interagency gaps and the international cooperation.
Basically, South Africa possessed laws but was not operational, and it did not have an interagency partnership to enforce them.
This was an expression of a broader issue that most developing economies are grappling with: regulation versus implementation.
The Reform Roadmap: The FATF Reform Concerns
South Africa was in turn, responded with an aggressive two-year reform programme.
The recommendations of the 22 FATF were followed by the action plan, and each of them addressed a significant aspect of the AML/CFT ecosystem.
Reforms covered the shortcomings in the areas of supervision, investigation, and beneficial ownership disclosure, three of the three priority areas of FATF.
The government also enhanced its relationship with the private sector, financial institutions, and DNFBPs so that compliance was not only a legal obligation but also a culture.
Cooperation between stakeholders played the main role in restoring the confidence of other countries and harmonising national practices with the FATF standards.
Legal and regulatory Reforms
The Parliament of South Africa hastened some of the amendments to the current laws with such acts as the Financial Intelligence Centre Act (FICA) and the Companies Act.
These reforms broadened the meaning of responsible institutions and demanded a more rigorous customer due diligence (CDD), both in the financial and non-financial sectors.
The Financial Intelligence Centre (FIC) was given more independence and powers to request compliance data, conduct investigations into suspicious transactions, and place sanctions on infractions.
Also, the new rules demanded that DNFBPs have accurate and readily accessible records of the activities of their clients and report suspicious transactions, which subjected them to the same controls as banks and other financial institutions.
Aligning these laws with those of FATF and FinCEN enhanced money laundering and terrorist financing detection, reporting, and deterrence in South Africa.
Enhancing the Institutional Capacity
The changes in the law were not enough; the government also put a lot of money in the institutional capacity.
The training, funding, and digital resources were given to agencies such as the FIC, the South African Revenue Service (SARS), and the law enforcement agencies to improve their AML/CFT efforts.
It was a new coordination framework that enhanced information sharing amongst the agencies.
FIC and FinCEN shared experience and intelligence, as well, to perfect the data-driven methods of detecting financial crimes.
This international cooperation was an indication to the FATF that South Africa was determined to adopt international best practices in prevention and enforcement.
The concrete result was that the number of investigations and prosecutions over financial crimes increased, and the quality of Suspicious Transaction Reports (STRs) submitted by financial institutions and DNFBPs was enhanced.
Improving Transparency in Beneficial Ownership
FATF left one of the most important expectations that the authorities had to obtain access to the proper beneficial ownership (BO) information promptly.
Before the reforms, the company and trust registries of South Africa were scattered in a manner that shell companies could hide actual owners behind illegal business operations.
The government has used a centralized beneficial ownership register and imposition of penalties on those who did not provide correct information in order to bridge this gap.
This database enabled the authorities to monitor the real owners of assets and companies, which is a big step towards transparency and accountability.
The endeavour was also in line with the FinCEN Corporate Transparency Act that mandates proper ownership disclosure of legal entities in the United States.
These standards coming together made the South African reforms more credible.
Supervision of DNFBPs on the basis of risks
The FATF had long stressed that countries should use a risk-based approach to supervision, and especially among DNFBPs – fields which tend to become a gateway to money laundering.
South Africa reacted by broadening its supervisory authority to include lawyers, accountants, and real estate agents, and precious metals and stones dealers.
The regulatory authorities established obvious sectoral directives on the risk assessment and compliance requirements.
The FIC also came up with sophisticated analytics tools to determine the degree of risk in various industries so that the supervision of the financial crime exposure would be more concentrated in areas that had the greatest exposure.
This risk-based approach was not only in line with FATF recommendations, but also in line with the FinCEN approach towards proportional, intelligence-driven regulation.
Enhancing Judicial and Law Enforcement Performance
The fact that only a small number of money laundering prosecutions were successful was one of the primary causes of South Africa having shortcomings in the past.
The revisions focused on making intelligence convictions.
Division and special prosecution in the financial crime were enhanced, and prosecution, FIC, and SARS joined their efforts in a more organised manner.
Courts were also trained on complex financial cases, which will help them to adjudicate cases faster and more consistently implement the AML/CFT laws.
Consequently, South Africa showed the FATF that it was no longer merely detecting financial crimes but prosecuting and seizing illegal properties actively, which is one of the crucial pre-requisites to delisting.
International Cooperation and FinCEN Alignment
Coming off the greylist was also a sign of South Africa renewing its involvement with the partners in AML/CFT in the world arena.
The FATF observed that there was weak cooperation between nations, especially in the sharing of information regarding cross-border financial flows and beneficial ownership.
The cooperation of the FIC with FinCEN, Interpol, and local organizations such as the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) increased the transfer of information and legal cooperation.
This collaboration demonstrated the intentions of South Africa to have an open and globally connected financial system.
This and more was a reminder of the fact that the FATF greylist exit was not merely about complying with minimum technical requirements but developing a sustainable compliance culture.
The Economic and Reputational Effect of Delisting
The removal of South Africa from the FATF greylist in 2025 directly positively affected the economy of the country.
The decision was taken as an indication of stability in regulation and a better governance structure for the International investors.
The rand appreciated marginally after the announcement, and the local banks claimed that they experienced less friction in cross-border transactions.
More to the point, the delisting regained the credibility of South Africa in foreign financial institutions and credit rating agencies.
In terms of reputation, it was an indication that the financial system in the country met the requirements of the global world in terms of integrity, transparency, and accountability.
Moving Forward: Continued Compliance
Although the move made by the FATF to take South Africa off the greylist is a win, the analysts caution that to ensure compliance, there must be constant efforts.
The FATF and FinCEN frameworks are dynamic and are continuously being updated to consider emerging risks, such as virtual assets, cyber-enabled crime, and trade-based money laundering.
South Africa should also be on the offensive with technology investment, training of the regulators, and keeping close communications among financial organizations and the DNFBPs.
Maintaining a firm AML/CFT compliance environment will guarantee that the country is not listed on the greylist and retain investment and the will of the rest of the world.
Conclusion
The fact that South Africa is no longer on the FATF greylist in 2025 is a sign of the effectiveness of radical structural changes, modernisation of laws, and the effectiveness of enforcement systems.
The country achieved not only the international level of compliance but also proved its stability and the desire to be financially transparent by converting its systems to the standards of FATF and FinCEN.
Better supervision of DNFBPs, greater positive ownership controls, and more global collaboration have enabled South Africa to lead by example to other countries that have been endeavouring to tighten their AML/CFT regimes.
The case of its passage from grey listing to delisting demonstrates that with the political intent, coordination, and responsibility, even the most complicated financial systems can be turned into the paradigms of compliance and honesty.
*The author of this article is Steve Williamson, a dedicated content writer specialising in technology, business, and finance. The views expressed by Steve Williamson are not necessarily those of The Bulrushes
