20 of the 22 Action Items are satisfied by the Financial Intelligence Centre (FIC) of South Africa with the publication and gazetting in February of the final Guidance Note 7A. Decisive action before the end of June 2025 is required to position South Africa to leave the Grey Listing behind. Successful and sustained enforcement on the remaining two Action Items would enable South Africa to be considered by the FATF for delisting from the “grey list” at the October 2025 Plenary. Hurry – There is no time to waste in recovering pride of place in the global financial structures.
ZUPTA Criminals Reduced The Nation To International Financial Pariah – South Africa was “grey listed” in February 2023. Now the Financial Action Task Force (FATF) announced on February 21, 2025 the satisfaction of four of the final six outstanding Action Items at the conclusion of its latest plenary meetings in Paris, France. That leave only two more to satisfy – and – the hardest two of all. South Africa is now deemed by FATF to have satisfied or significantly satisfied 20 of the 22 Action Items set forth in the FATF recommended and South African proposed corrective Action Plan, leaving only two Action Items to be addressed.1 The Plenary agreed to give South Africa more time to address these two remaining Action Items than what was offered in the original sanction order grey listing the nation. Instead of now, South Africa has until the next reporting period (that runs from March 2025 to June 2025) to substantively resolve these two Action Items. Should South Africa address both outstanding Action Items and complete action by June 2025 it is theoretically possible that it would enable an exit from “grey listing” by October 2025. Successful meaningful institutional reforms on these two Action Items would enable South Africa to be considered by the FATF for delisting from the “grey list” at the October 2025 Plenary. The February 2025 assessment was led by the International Monetary Fund which recommended the positive rating to FATF members at the Plenary.
1 FATF criticised South Africa’s failure to show serious commitment to prosecuting individuals linked to state capture. Countering terrorism financing remains a key deficiency for South Africa. In 2021, FATF gave the country one of its lowest scores for countering terrorist financing. The warning signs became clear by the end of 2022, but despite urgent legislation introduced to avoid grey listing, it happened in February 2023.
The end of the kleptocratic regime2 of Jacob Zuma on February 14, 2018 did not automatically restore all the functions of good government disassembled and discredited over the prior nine years.3 The Zuma purposeful refusal to sign the Financial Intelligence Centre Amendments Act (FICA) was the most significant cause of the grey listing.4 The law remained unsigned until April 26, 2017 such was the opposition within the ruling African National Congress party and Zuma’s faction.5 There were other hi-jinx in favor of the ruling cabal including a weekend decapitation of the financial cluster blocking a raft of self-dealing, and a dual taxation treaty with the UAE to shield purloined wealth sequestered in Dubai from South African taxing authorities.6
Consider the context in which FATF determined grey listing was a required action. The Zuma presidency commenced on May 9, 2009. When he installed his cabinet the Moody’s Rating was already pegged at A3 Stable (July 18, 2009) which was an improvement on the Baa1 Positive (June 5, 2007) rating fought for by President Thabo Mvuyelwa Mbeki and his team. The rating progressively tumbled as the Zuma corruption broke open in the press with the Moody’s Rating dropping to Baa2 (April 3, 2017) and further still to Baa3 Stable (March 23, 2018) after his departure from office February 14, 2018. Moody’s last adjusted the rating to Ba27 Stable on April 1, 2022 – before grey listing – which is a “junk status”8 and Moody’s has not altered that rating to date.
The Financial Action Task Force (FATF) Plenary under the two-year Mexico Presidency led by Elisa de Anda Madrazo concluded February 21, 2025.9 Delegates discussed action plans on key issues including the promotion of financial inclusion (for under represented areas) and the continued revisiting of the standards best suited to advance the risk-based approach to enforcement of laws and identification of malign actors in the financial markets. South Africa was reviewed for progress in addressing the Zuma era decay and delays which allowed South Africa to “fall behind” the other members of the FATF when it came to preventing international financial crimes.
Mercy From Neglected Friends & Peers – The mercy shown by South Africa’s neglected international friends and peers was noteworthy. It was not completely earned if measured by actual implementation by a fully committed government and industry. It was mercy show as a debt repaid from past salutary actions of South Africa. The continued stand alone effort of Treasury and SARB are not enough to implement the hard parts of the crime fighting agenda of FATF. The decision by the FATF Plenary to extend the South African government’s reporting cycle for the two Action Items on investigations and prosecutions for serious and complex money laundering and terror financing activities reflects the fact that these are the most demanding goals of every country’s systems. The Zuma era led to a weakening of the formerly well regarded South African regime for combating money laundering and terrorist financing. Now South Africa must demonstrate that the improvements are sustained over successive FATF reporting periods using all the tools of government and private industry. The Government of National Unity may be in a good political position to succeed in this goal of demonstrating multiple quarters of sustained vigilance of the financial system monitors as money flows inbound and outbound from South Africa are scrutinized.
The FATF report concluded that South Africa has a solid legal framework for combating money laundering and terrorist financing but significant shortcomings remain. In particular, the country needs to pursue money laundering and terrorist financing in line with its risk profile, including by proactively seeking international cooperation, detecting and seizing illicit cash flows, and improving the availability of beneficial ownership information. Authorities need to make better use of the financial intelligence products provided by South Africa’s financial intelligence unit (FIC). The country should also improve the application of the risk-based approach by accountable institutions and supervisory personnel inside such entities.
Actions Rather Than Speeches – The Financial Intelligence Centre (FIC) of South Africa concluded a comprehensive consultation process, resulting in the publication of the final Guidance Note 7A (GN 7A) on 13 February 2025.10 GN 7A replaces Guidance Note 7 (GN 7), and was developed through consultation of government and private industry between April 2022 and June 2024 in South Africa. GN 7A provides updated guidance on how accountable institutions should implement their Risk Management and Compliance Programmes (“RMCP”) under the Financial Intelligence Centre Act, 2001 §42B (FICA), emphasizing a more robust approach to identifying and mitigating money laundering and terrorist financing risks, including a requirement to assess risks associated with new products, services, and technologies within the business operations; essentially strengthening anti-money laundering and counter-terrorism financing regulations in the country. The significant changes are found in Chapter 4.11
Tough Love From South Africa’s Peers – Grey listing is not arbitrary nor politically driven as the process is a peer review product using mutually agreed rules of conduct by the financial regulators of the participating countries.12 South Africa’s membership dates back to 2003, and the Reserve Bank and Treasury are well versed in the protocols all of which are products of South African participation. The FATF continually identifies and reviews jurisdictions (such as South Africa) with strategic AML/CFT deficiencies that present a risk to the international financial system and closely monitors their progress.13
The degree of transparency by this international non-governmental group is reasonably calculated to inform the attentive public. The FATF publishes two statements at the end of each plenary meeting, in February, June, and October. These statements provide a short summary of the recent actions taken in accordance with each jurisdiction’s action plan, as well as a list of the strategic deficiencies remaining to be addressed.
The FATF’s International Co-operation Review Group (ICRG) oversees the process. For all countries under ICRG review, such as South Africa, the FATF requires a high-level political commitment that the jurisdiction will implement the legal, regulatory, and operational reforms required by the action plan. Four regional Joint Groups of the ICRG carry out the reviews, covering: Africa, the Americas, Asia/Pacific, and Europe/Eurasia/Middle East and North Africa. Each jurisdiction under review has the opportunity to participate in a face-to-face meeting to discuss the analysis of the Joint Group in advance of FATF plenary meetings.
What South Africa Must Accomplish Before June 2025 – The comprehensive risk assessment regime must be upgraded and enforcement tightened in a quantifiable manner. This requires a broader business risk assessment beyond just client risk, encompassing all aspects of the institution’s operations, including new products, delivery mechanisms, and technologies.
Examples include accountable institutions updating their Risk Management Compliance Programs (“RMCP”) to reflect the new FATF guidance, including detailed documentation of systems and controls for managing money laundering and terrorist financing risks. Risk mitigation controls and enhanced Know Your Customer (“KYC”) are required with self-audits to ensure effectiveness. The RMCP may require a group-wide standard RMCP, but only if there are clear outlines of what applies to different entities within the group. The highest level of management are required to approve the RMCP and to then personally ensure compliance with the RMCP. The mandate appears to be a non-delegable duty for senior management. The highest level of management is now clearly solely responsible for the RMCP effectiveness.
Alignment with FATF standards – End Zone In Sight – South Africa’s FIC through its Guidance Note 7A (GN 7A) process aims to address outstanding deficiencies identified by the Financial Action Task Force (FATF) regarding South Africa’s anti-money laundering and counter-terrorism financing regulations. There have been material amendments to the new Chapter 4 of GN 7A (previously Chapter 4 of the GN 7), which provides guidance to the board of directors (where the accountable institution is a legal person with a board of directors), senior management (of an accountable institution without a board of directors), and persons holding the highest authority in accountable institutions in relation to the Risk Management and Compliance Programme (RMCP) obligations of an accountable institution as set out in section 42B of the Financial Intelligence Centre Act (FICA).
12 The FATF grey list, also known as “jurisdictions under increased monitoring,” is a list of countries identified by the FATF as having strategic deficiencies in their AML/CFT regimes. 13 The FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in two FATF public documents that are issued three times a year. https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html
All accountable institutions supervised by the Financial Intelligence Centre (FIC) were required to submit a copy of their risk management and compliance programme (RMCP) to the FIC, in terms of section 42(4)(a) of the Financial Intelligence Centre Act, 2001 (Act 38 of 2001), by close of business on Wednesday, 12 March 2025.
The FIC has noted that they will not accept standard templates which are being offered in the marketplace – this is not simply a tick box exercise but a detailed risk analysis and mitigation document. EXACTLY follow the FIC instructions on how to save and name their submission documents and then also to upload the latest board-approved RMCP. It is important to note that any approvals obtained post the release of FIC Guidance Note 7A will have to follow the 7A rules such as the directors statement that each fully understands the documents, has received any training and guidance necessary so that he/she can appreciate the contents of the RMCP, and a statement that he/she has not delegated responsibility or liability to any other person and can apply the document.
Each accountable institution must submit the RMCP electronically using the FIC goAML web platform https://www.fic.gov.za/wp-content/uploads/2025/03/2025.3-GN-RMCP-Letter- Request_250304.pdf
References
2 https://pari.org.za/wp-content/uploads/2017/05/Betrayal-of-the-Promise-25052017.pdf
3 https://www.news24.com/fin24/zuma-lobbied-not-to-sign-bill-that-will-scrutinise-bank- deals-report-20160905
4 https://hsf.org.za/publications/hsf-briefs/the-fic-amendment-bill-and-the-presidential- signature
5 https://www.fic.gov.za/wp-content/uploads/2023/09/2017.6-MR-The-FIC-Amendment-Act- signed-into-law-.pdf
6 https://www.gov.za/documents/income-tax-act-agreement-between-south-africa-and-united- arab-emirates-avoidance-double
7 Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk on the Moody’s scale.
8 “junk” is the same as “sub-investment grade” for government debt instruments. A downgrade to “junk” status means that a country is perceived as a defaulting risk because it can’t pay back what it has borrowed. As a result, investors require higher compensation for the risk taken, expressed in a risk premium. Junk status means investors have to reassess the risk premiums required when making equity valuations and bond pricing, and premiums paid on insurance against default.
9 Financial Action Task Force (FATF) Plenary February 2025 https://www.fatf- gafi.org/en/publications/Fatfgeneral/outcomes-fatf-plenary-february-2025.html
10 https://www.fic.gov.za/wp-content/uploads/2025/02/2025.2-GN-implementation-of-fic- act.pdf
11 The FATF (Financial Action Task Force) Chapter 4, specifically Recommendation 4, focuses on confiscation of property related to money laundering and terrorist financing, including measures that allow laundered property to be confiscated without a criminal conviction. https://www.fatf-gafi.org/content/dam/fatf- gafi/methodology/FATF%20Methodology%2022%20Feb%202013.pdf.coredownload.inline.pd f
Regina Mundi Global Advisors 