“GREYLISTING”: SOUTH AFRICA’S PROGRESS PLAN AGAINST ITS ACTION PLAN
Issued by National Treasury
29 February 2024 – The FATF published the latest update on South Africa on 23 February 2024, following the conclusion of the February 2024 FATF Plenary meetings. South Africa’s progress update is listed on the progress for “Jurisdictions under Increased Monitoring – 23 February 2024” (FATF Update on greylisted countries February 2024).
When the FATF greylisted South Africa at its February 2023 Plenary meetings, a jointly agreed Action Plan was adopted listing 22 action items linked to the strategic deficiencies identified in the Anti-Money Laundering and the Combating of the Financing of Terrorism (AML/CFT) regime. South Africa is required to address all 22 to exit the FATF grey list. The deadlines for addressing the action items fall between January 2024 to January 2025. Should South Africa be assessed to have largely addressed all 22 Action Items in February 2025, the FATF will schedule an onsite visit in April/May 2025, to confirm that assessment and make a recommendation to the June 2025 FATF plenary.
The February 2024 FATF Plenary adopted a report by the Joint Group, confirming that five of the 22 Action Items are now addressed or largely addressed. These relate to the legal provisions criminalizing terrorist financing and underpinning South Africa’s targeted financial sanction regimes related to terrorism financing and proliferation financing, increasing the use of financial intelligence from the Financial Intelligence Centre to support money laundering investigations, and increasing the resources of AML/CFT supervisors.
In this cycle of reporting, the FATF also considered that two further action items that were previously not addressed, have now been partly addressed, confirming that 14 of the 17 outstanding action items have now been partly addressed. Three action items still have not been addressed as yet. The deadline for South Africa to address (or at least largely address) 4 of the outstanding action items in the Action Plan, is May 2024. The FATF will consider South Africa’s progress on these action items at its Plenary meeting in June 2024. A further 8 action items are due in September 2024, and the final 5 items are due in January 2025.
National Treasury notes that whilst South Africa is on track to address all the outstanding action items, it remains a tough challenge to address all 17 of the remaining action items by February 2025. All relevant agencies and authorities will need to continue to demonstrate significant improvements, and also for such improvements are being sustained.
Progress in addressing technical compliance deficiencies (related to the 40 FATF recommendations)
The process in addressing effectiveness deficiencies is distinct from the process in addressing technical compliance deficiencies (related to the adequacy of the country’s AML/CFT laws and policy frameworks). As reported in a National Treasury media statement on 29 November 2023 (National Treasury Media Statement 29 November 2023) , the October 2023 FATF Plenary formally re-rated
18 of South Africa’s 20 deficiencies, based on the progress made by the South African authorities in the two-year period following the 2021 mutual evaluation. Of these, 15 were upgraded to a point where they are no longer deficient, as 14 Recommendations are now fully or largely compliant, and one Recommendation was deemed to be inapplicable to South Africa. Following these re-ratings,
South Africa is now deemed to be fully or largely compliant in 35 of the 40 FATF Recommendations, including in 5 of the 6 core FATF Recommendations. South Africa will apply for further re-ratings of technical compliance deficiencies, for the consideration of the October 2024 FATF Plenary.
Grey listing note: SA makes substantial progress, on track to get off grey list
Issued by Investec
29 February 2024 –
- South Africa was grey listed a year ago, on 24th February, by the Financial Action Task Force (FATF), as it was deemed insufficiently complaint in being able to prevent money laundering, terrorist financing and proliferation financing.
- To recap, in the mutual evaluation report FATF identified South Africa’s compliance (in being able to prevent money laundering, terrorist financing and proliferation financing) in only 20 of the 40 FATF recommendations, and so had 20 deficiencies.
- South Africa’s Budget this month gave an update on the progress SA has made since its greylisting, and FATF has now re-rated 15 of the prior 20 deficiencies to being no longer deficient, with 14 of these either fully or largely compliant.
- One recommendation is no longer applicable. This means SA needs to meet only five outstanding technical deficiencies, in which it is already partially compliant, and is aiming to make these areas fully complaint by the end of October this year.
- The five areas that SA still needs to show full technical compliance are in national and international cooperation, NGOs, targeted financial sanctions related to terrorism and terrorist financing, new technologies and cash couriers.
- FATF has said “(o)verall, the expectation is that countries will have addressed most, if not all, technical compliance deficiencies by the end of the third year from the adoption of their Mutual Evaluation Report.”
- “South Africa has addressed most of the technical compliance deficiencies within 2 years of the publication of its Mutual Evaluation Report”. This is strong progress and SA provides FATF with progress reports every four months on its Action Plan.
- However, National Treasury warns it “will require a significant effort from all the relevant South African authorities … to address the remaining 5 deficiencies … for South Africa to exit the FATF greylist”.
- South Africa has shown marked progress in meeting the requirements to get off the greylist by February 2025. Once all items are implemented and the improvements are deemed sustainable FATF will reconsider South Africa’s greylisting status.
- South Africa is working closely with the FATF to implement the items in the Action Plan, to deal with financial crimes, including corruption, through using digital and other information to assist investigations, asset recoveries and prosecutions.
- It is building “a financial system that is less vulnerable to abuse and where abuses are effectively prosecuted” involving both “legislative and regulatory changes” and “improvements in the implementation and application of these laws and regulations”.
- Already in late 2022, government had enacted two key legislative amendments to address the identified problem areas, the first being the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act (2022).
- The second piece of legislation enacted was the Protection of Constitutional Democracy Against Terrorist and Related Activities Amendment Act (2022). “These amendments address most of the legislative deficiencies identified”.
- Since the greylisting, Cabinet and the Justice, Crime Prevention and Security (JCPS) Cluster has overseen the Action Plan’s implementation with National Treasury chairing the Interdepartmental Committee on AML/CFT (IDC-AML/CFT).
- The IDC-AML/CFT includes a large number of government departments and agencies such as the South African Police Services’ Directorate for Priority Crime Investigation (the Hawks) and the National Prosecuting Authority.
- The list continues with the Special Investigating Unit, the State Security Agency, the Financial Intelligence Centre, the South African Reserve Bank, the Financial Sector Conduct Authority, the Department of Justice and Constitutional Development.
- As well as the Companies and Intellectual Property Commission and the South African Revenue Service. “Cabinet has been closely monitoring progress by the IDC-AML/CFT and government departments and agencies.”
- Overall, the focus is on strengthening the South Africa’s capability to deal with financial crimes by substantially improving the effectiveness of the system. The next FATF Follow-Up report in October/November 2024.
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