South Africa faces new greylist test

South Africa could find itself back on the Financial Action Task Force’s (FATF) grey list just two years after the country was taken off.

Countries on the FATF’s grey list are deemed to have weak prevention measures for countering money laundering, terrorism financing, and other financial crimes.

These countries are subsequently placed under increased monitoring by the FATF while the country works to address these weaknesses within given timelines.

The FATF removed South Africa from its grey list on 24 October 2025, 32 months after the country was placed there in February 2023.

However, concerns have been raised that the FATF’s latest investigation, which will run until October 2027, could see the country placed back on the list.

ENS Head of Forensics Practice Steven Powell told 702 that merely having anti-money laundering laws which comply with international standards was no longer enough.

Under the FATF’s latest investigative process, South Africa needs to also demonstrate that its authorities can successfully investigate and conclude cases of serious financial crime.

“It’s not whether we’ve passed the laws and whether the institutional reforms are actually producing results,” Powell said. “We have to show we’ve got the right laws on the books.”

“But we’ve got to see sustained investigations, prosecutions, convictions and asset recovery in serious financial crime matters.”

Landing back on the grey list would see foreign investment in South Africa decrease, and would place greater restrictions on cross-border transactions.

As a result, the rand would likely weaken alongside an increase in the cost-of-living and of doing business, negatively impacting job creation and employment.

This would place strain on South Africa’s economy, which already finds itself under financial pressure, and as such is an outcome Powell said the country should try to avoid.

“People need to be convicted because we’ve got to demonstrate to the public at large, apart from the FATF, that the criminal justice system is working and that crime doesn’t pay,” Powell said.

“If you are going to commit fraud or get involved in dodgy tenders, we will take away the proceeds of crime and you will go to jail. We need the convictions to restore confidence in our criminal justice system.”

How South Africa can demonstrate real-world success

Demonstrating the practical success of South Africa’s anti-financial crime laws will be substantially more difficult than simply showing that these laws exist.

However, Powell said there have been a few recent success stories which he believes could serve as useful evidence for the FATF’s investigation.

He pointed specifically to the Asset Forfeiture Unit’s recent seizure of R326 million from alleged members of the Maumela syndicate, in relation to a Tembisa hospital looting scandal.

“This is phenomenal, because we’ve seen six luxury properties, three Lamborghinis, a Bentley Continental, and a luxury boat all forfeited to the state,” Powell said.

“As long as we can continue to do this, we’ll be able to demonstrate a good case to the FATF not to put us back on the grey list.”

Powell also said the ongoing Madlanga Commission of Inquiry had revealed corruption and obstruction of South Africa’s criminal justice system on a large scale.

Since it began in June 2025, five senior police officers have been referred for further investigation regarding an alleged R80,000 payment from a suspected cartel boss.

While he said this could serve as evidence of positive action for the FATF’s investigation, others have raised concerns that this may have the opposite effect.

National Treasury technical advisor Ismail Momoniat warned that spotlighting the findings of the Commission could bring the country’s ability to deal with organised crime under direct scrutiny.

Similarly, RelyComply CEO Bradley Elliot said South Africa’s law enforcement needs to show that it can successfully carry out investigations, prosecutions, and convictions of money laundering.

“You can’t argue South Africa is enforcement-ready while the officers meant to run organised crime investigations are themselves under investigation,” Elliot said.

Powell previously argued that the outcome of the FATF’s investigation will likely hinge not only on the findings made at the Madlanga Commission, but what comes after as well.

He warned that South Africa would be monitored very closely on how it chooses to respond to the Commission’s findings in referring more officials and other role-players for prosecution.

This response will ultimately determine in the eyes of the FATF whether South Africa is able to demonstrate its effectiveness in combating serious financial crime, keeping it off the grey list.

National Treasury submitted an initial compliance report to the FATF earlier this week as part of the ongoing Fifth Round Mutual Evaluation.