South Africa scores a major victory

South Africa’s recent removal from the European Union’s (EU) list of high-risk jurisdictions will reduce compliance burdens on international transactions and boost trade opportunities.

The National Treasury has welcomed the EU’s decision to remove South Africa from its list of “high-risk third country jurisdictions”.

South Africa was automatically added to the list in 2023 when it was greylisted by the Financial Action Task Force (FATF).

Since then, South Africa has made significant strides in strengthening its anti-money laundering and counter-terrorism financing (AML/CFT) systems in an effort to be removed from the list.

Following South Africa’s removal from the greylist on 13 October 2025, the EU decided to remove the country from its list of high-risk countries on 9 January 2026. The decision will take effect on 26 January 2026.

The EU issued a statement acknowledging the progress made by South Africa and five other African countries – Burkina Faso, Mali, Mozambique, Nigeria, and Tanzania.

The EU said these countries “have strengthened the effectiveness of their AML/CFT regimes and addressed technical deficiencies to meet the commitments in their action plans on the strategic deficiencies identified by the FATF”.

“The Commission therefore considers that Burkina Faso, Mali, Mozambique, Nigeria, South Africa and Tanzania no longer have strategic deficiencies in their AML/CFT regimes.”

The National Treasury explained that this change will ease financial friction with Europe and support trade, investment and cross-border payments.

The United Kingdom has also removed South Africa from its similar list of countries which pose a high risk for terror financing and money laundering.

Speaking to Newzroom Afrika, KPMG South Africa lead economist Frank Blackmore said this decision will provide a boost to the South African economy.

He explained that South Africa saw a number of positive developments towards the end of 2025. “We stuck to our fiscal consolidation. We had sovereign debt upgrades,” Blackmore said.

“We lowered the inflation target to 3% and we’ve seen a stronger rand through much of last year. All of these contribute to a better environment for South Africa.”

Good progress – but work remains

Being on the FATF greylist, or the EU or UK’s similar high-risk lists, means that countries are required to do additional due diligence if they want to do business with South Africa.

“If you’re in a world of competition and it takes you a lot more effort and time, and money to check South African transactions, you would rather do business elsewhere,” Blackmore said.

Being removed from these lists means that there will be a reduced compliance burden on these countries, setting the stage for increased trade between South Africa and Europe.

Although the country has made positive strides with its removal from the FATF greylist, Blackmore said South Africa still has a lot more work to do. “The National Treasury has said it’s only a beginning to get off that list,” he said.

“They still have further targets of their own in terms of prevention, identification, investigation, and prosecution of money laundering and terrorist financing activities within the country.”

Blackmore said that for South Africa, strengthening these processes will be an ongoing process as the country continues to tighten its systems.

“We don’t want money flowing where it shouldn’t be flowing,” he said, adding that a lot of the cash lost to money laundering and terrorism financing is taxpayer money.

This is money that could instead be invested in the country’s economy, improving the lives of South Africans through better goods and services. “So it’s important that these holes are plugged,” Blackmore said.

In the coming months, South Africa is expected to enter a new round of FATF mutual evaluation. The final report is scheduled for presentation to the FATF plenary in October 2027.

The Treasury stated that preparations are already underway and that it is drawing on lessons learned during the process of working to remove South Africa from the greylist.