South Africa stands at a pivotal moment as the Financial Action Task Force (FATF) Africa Joint Group arrives for its July 2025 onsite inspection. This review represents the culmination of over two years of accelerated legislative, regulatory, and enforcement upgrades triggered by South Africa’s placement on the FATF grey list in February 2023. The country’s exit from greylisting now hinges on its ability to not only demonstrate technical reforms, but also show real, measurable effectiveness in the fight against money laundering and terrorist financing.

The FATF greylist is more than just an embarrassment for a G20 economy. It signals systemic weaknesses in preventing illicit financial flows, exposing South Africa to higher transaction costs, reputational damage, and a chilling effect on international investment and correspondent banking relationships. Since being greylisted, South Africa has scrambled to address 22 recommended action items, each demanding tangible improvements to its anti-money laundering and counter financing of terrorism (AML/CFT) regime.

The Africa Joint Group’s July 2025 assessment will determine whether South Africa’s progress justifies removal from the greylist at the October 2025 FATF Plenary. For local businesses, global banks, and regulators alike, the stakes could hardly be higher.

FATF Greylisting: South Africa’s Road to Reform

The FATF, a global standard-setter for AML/CFT, identified significant deficiencies in South Africa’s compliance following its 2021 Mutual Evaluation Report. Among the most critical weaknesses were insufficient investigations and prosecutions of complex money laundering cases, inconsistent access to beneficial ownership data, and limited effectiveness in freezing and confiscating criminal assets. In response to these findings, South Africa was placed under increased monitoring—a process often referred to as greylisting.

Being added to the greylist pushed South Africa to enact a rapid series of legal and institutional reforms. Parliament amended the Financial Intelligence Centre Act (FICA) and related legislation to strengthen risk-based supervision, expand the range of accountable institutions, and enhance the powers of the Financial Intelligence Centre. Law enforcement agencies, including the Hawks and National Prosecuting Authority (NPA), received increased funding and strategic direction to improve their focus on financial crime. The Companies and Intellectual Property Commission (CIPC) was empowered to collect and maintain beneficial ownership registers in line with global standards.

These reforms quickly moved South Africa from “partially compliant” to “largely compliant” status across most of the FATF’s 40 Recommendations. The number of registered suspicious transaction reports (STRs) rose significantly, and new regulatory guidance clarified expectations for financial institutions on customer due diligence, record-keeping, and enhanced monitoring for higher-risk clients.

Despite these efforts, FATF found in its 2023 follow-up report that two core deficiencies remained. First, there was still insufficient evidence of sustained increases in money laundering investigations and prosecutions, especially for serious and complex cases. Second, South Africa needed to show a consistent ability to pursue and secure asset confiscations linked to proceeds of crime and terrorist financing.

Onsite Inspection: What the FATF Africa Joint Group Will Examine

The Africa Joint Group’s July 2025 visit represents the decisive phase of the greylisting process. Unlike previous reviews that focused mainly on legal and technical compliance, this inspection centers on effectiveness—whether reforms are delivering real-world results.

During the two-day onsite review, FATF evaluators are expected to meet senior officials from the Hawks, the NPA, the Financial Intelligence Centre, the South African Reserve Bank, and key financial sector regulators. They will request evidence of:

• A demonstrable increase in the investigation and prosecution of money laundering and terrorism financing offenses, with particular emphasis on complex cases.
• Successful asset tracing, freezing, and confiscation actions, especially those targeting high-value or cross-border criminal activity.
• Effective use and sharing of financial intelligence between competent authorities.
• Real improvements in the quality and timeliness of beneficial ownership information, and how this information is used in criminal investigations.
• Meaningful private sector engagement, including cooperation between financial institutions and law enforcement.

For South Africa, this means providing detailed case studies, statistics, and other proof that reforms are not just “on paper” but are actually changing how financial crime is detected, investigated, and prosecuted. The FATF places particular weight on sustainable progress, rather than one-off successes. Investigators must demonstrate that increased enforcement is the result of improved systems, training, and coordination, rather than a temporary surge in activity driven by external pressure.

If the Africa Joint Group is satisfied that South Africa has achieved a sustained and effective response, it will recommend the country for removal from the greylist at the FATF October Plenary.

Challenges and Impact of FATF Greylisting on South Africa

The consequences of remaining on the FATF greylist extend far beyond the technical realm. South Africa’s ongoing greylisting has contributed to increased costs and delays in cross-border transactions, greater scrutiny from correspondent banks, and a reluctance among foreign investors to commit capital. The country’s major banks and corporates face persistent requests for enhanced due diligence from international partners. Some have reported being unable to open new accounts or process transactions in US dollars and other major currencies due to risk-based de-risking by global financial institutions.

Greylisting has also placed domestic pressure on South Africa’s government and private sector to modernize compliance programs. Many firms have invested in advanced transaction monitoring systems, enhanced employee training, and more sophisticated risk management frameworks. The proliferation of guidance from regulators and industry bodies has resulted in a step-change in awareness and preparedness across the financial sector.

Despite these improvements, longstanding challenges remain. South Africa continues to struggle with widespread predicate offenses, including corruption, tax evasion, illicit tobacco and gold trading, and environmental crimes. Many criminal networks retain access to shell companies, informal value transfer systems, and professional enablers that allow them to launder illicit proceeds. Law enforcement capacity is still hampered by resource constraints, skills gaps, and the need for greater cooperation with counterparts in other jurisdictions.

As the country approaches the crucial FATF review, maintaining momentum and ensuring lasting change is essential. The risk of reverting to previous levels of enforcement or deprioritizing financial crime after a possible delisting remains a concern among international observers.

Pathways to Effective and Sustainable AML/CFT Compliance

To fully address the FATF’s expectations and reduce the long-term risks associated with money laundering and terrorist financing, South Africa must embed recent reforms into the DNA of its institutions. This involves moving beyond mere technical compliance and ensuring that AML/CFT measures are part of day-to-day operations, both in government agencies and across the private sector.

Key priorities for sustaining progress include:

• Continued investment in the skills and resources of financial crime investigators and prosecutors, with a focus on forensic accounting, digital evidence, and asset recovery.
• Strengthening the cooperation between the Financial Intelligence Centre, regulators, and law enforcement, supported by robust information-sharing protocols.
• Ongoing improvements to beneficial ownership transparency, including regular updates, quality controls, and integration with international information exchange frameworks.
• Active engagement with financial institutions and designated non-financial businesses and professions (DNFBPs), ensuring that risk-based compliance measures are practical, proportionate, and tailored to the realities of South Africa’s economy.
• Leveraging technology, including artificial intelligence and machine learning, to enhance the detection of suspicious patterns, automate compliance checks, and respond swiftly to emerging risks.

Ultimately, South Africa’s ability to exit the FATF greylist and avoid future monitoring depends on its willingness to internalize a culture of compliance, rather than simply checking regulatory boxes.

South Africa’s Make-or-Break Moment in AML Reform

South Africa’s July 2025 FATF inspection stands as a turning point for the country’s reputation and economic future. Removal from the greylist would signal to the world that South Africa has built an effective and sustainable AML/CFT regime, opening the door to renewed investment and enhanced financial stability. However, success depends on proving that recent reforms are not only robust on paper, but are also producing measurable, lasting results.

By demonstrating real-world improvements in the investigation, prosecution, and confiscation of illicit assets, South Africa has the opportunity to leave the shadow of greylisting behind. The months ahead will test the resilience and credibility of the country’s institutions—and will shape the trajectory of financial crime risk management for years to come.

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Related Links

• FATF – Jurisdictions under Increased Monitoring (Grey List)
• South African Financial Intelligence Centre – Legislation & Guidance
• South African Reserve Bank – AML/CFT Supervision
• FATF Mutual Evaluation Report: South Africa (2021)
• South African Companies and Intellectual Property Commission – Beneficial Ownership

Other FinCrime Central Articles About South Africa’s Latest Efforts

• South Africa Implements the Crypto Travel Rule to Strengthen Financial Integrity
• South Africa’s Terror Financing Crisis: The Unchecked Flow of Extremist Funds
• South Africa’s Revamped Anti-Money Laundering Bill Targets FATF Deadlines

Source: PRIMEDIA+

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