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A report on South Africa’s progress in implementing AML procedures to prevent money laundering and terrorism financing was released by the International Financial Action Task Force (FATF).
According to the FATF, South Africa addresses its anti-money laundering system’s 20 technical compliance difficulties and enhances the measures to prevent financial crimes. The regulatory department claimed South Africa showed impressive progress in complying with international standards. Its AML measures have found significant improvements in many prospects. However, there are still deficiencies in some areas before overcoming that FATF will keep it under increased monitoring, well known as the “gray list” until the FATF investigation report in October 2024.
The weakness in South Africa’s compliance system was indicated in the 2021 FATF evaluations. They reported it as non-compliant with the 5 primary recommendations and partially upholding 15 of the FATF’s 40 recommendations. After this report, FATF added South Africa to “enhanced due diligence,” and was also added to the “increases monitoring” in February 2023. This decision damaged South Africa’s global reputation, including increased difficulties for individuals to open offshore bank accounts or invest internationally.
The latest report of the FATF is the first follow-up about South Africa’s progress in overcoming its AML weakness. It has resulted in FATF upgrading the country’s 20 recommendations. FATF stated, “following these re-ratings, South Africa is now deemed to be fully or largely compliant (or not deficient) in 35 of the 40 FATF Recommendations, including in five of the six core FATF Recommendations. This means that South Africa is left with five deficiencies in technical compliance (including three of the 18 which were upgraded from non-compliant to partially compliant), and two which remain partially compliant since 2021.”
South Africa’s National Treasury Department emphasised that FATF follow-up does not report the country’s financial institutes’ measures to comply with AML and addresses effectiveness in the system. That was agreed upon after the mutual understanding FATF would support South Africa in following international rigid obligations. The National Treasury stated, “South Africa’s progress against its Action Plan is reviewed by the FATF Africa/Middle East Joint Group (FATF AME JG). The Joint Group meets every four months, where South Africa is expected to report on progress in addressing the 22 action items in the Action Plan.”