FATF victory leaves adviser compliance load unchanged
The headline financial services news this October is that the Financial Action Task Force (FATF) has announced that South Africa has been removed from its ‘increased monitoring’ grey list, ending a punishment that was meted out almost three years ago, in February 2023. Today’s newsletter offers some comments on the development, which is unlikely to shift the administrative and compliance burden faced by financial and investment advisers.
Cost and complexity likely to remain
“Being on the grey list added a layer of cost to the complexity of doing business in South Africa, especially in relation to any offshore transactions,” explained Kevin Lings, Chief Economist at STANLIB. “It undermined investor sentiment and was an embarrassing position for the authorities, given that South Africa holds the Presidency of the G20 for 2025.”
Lings hopes the country’s exit from the grey list will provide a much-needed boost to investor, business and household confidence, helping to make 2026 a more prosperous year. It is worth noting, however, that the compliance and regulatory hurdles introduced by various enforcement and regulatory agencies to meet the FATF’s grey list removal criteria will remain in force.
Philip Robotham, Head of South Africa, Client Group at Schroders, said being grey listed had made it harder for foreign investors to do business in the country, given its higher-risk status and therefore enhanced due diligence requirements. Case in point: financial and investment advisers faced far tougher know your customer (KYC) scrutiny when onboarding new clients and when moving funds across borders.
“Exiting the grey list should make it cheaper and more efficient to do business here,” Robotham said. “This, together with the steps taken to correct various deficiencies and better detect financial crime, as well as the laws implemented to enforce compliance, should make the country a more attractive destination for capital and prove beneficial for the economy as a whole.”
A boost for investor confidence
The Banking Association of South Africa (BASA) issued an upbeat statement moments after the FATF announcement. “Business and investor confidence should receive a much-needed boost from the removal of South Africa from the ‘grey list’ of countries that have strategic deficiencies in their ability to counter money laundering, as well as terrorist and proliferation financing,” the association wrote. They singled out the effective regulation of the South African financial services sector as an advantage in attracting international investment.
Concerns remain. BASA said the FATF decision reflected an improvement in the country’s capacity to fight financial crime at a time when confidence in the country’s law enforcement was being challenged by evidence being presented at Parliamentary hearings and the Madlanga Commission of Enquiry. These mechanisms are investigating allegations of criminality, political interference and corruption in the criminal justice system. “The effectiveness and integrity of the country’s law enforcement agencies must be quickly and decisively restored to deal with concerns that South Africa is in danger of becoming a criminal state,” BASA wrote.
Financial crimes such as theft and corruption have far-reaching consequences, depriving companies of funds that can be used to expand capacity and create jobs, and government of resources to support the most vulnerable in society. According to BASA, the FATF offers the dual benefit of preventing the global financial system from being abused for criminal purposes and strengthening individual countries’ legislative and enforcement capacity to fight money laundering and financial crime.
Anti-money laundering deficiencies
Lings reminded readers why the country found itself on the list in the first place. “We were placed on the grey list due to deficiencies in our anti-money laundering and counter-financing of terrorism systems, which included insufficient enforcement of the laws,” he said. The FATF issued a long list of shortcomings and remediations to address same.
Earlier this year, in June 2025, the FATF announced that South Africa had substantially completed all 22 action items in its action plan, paving the way for its removal from the list. At the same review date, the task force also determined that Burkina Faso, Mozambique and Nigeria had substantially completed their action plans. These countries also exited the list on 24 October, leaving some 30 countries still under review.
Changes introduced by National Treasury, the South African Reserve Bank (SARB), the South African Revenue Service (SARS), the joint financial sector regulators and others remain in force, and all stakeholders must ensure there is no backsliding. In fact, Lings hinted that we were somewhat lucky to make the delisting grade due to “concerns over a lack of prosecutions of serious and complex money laundering crimes, as well as the need to increase the effective identification, investigation and prosecution of the full range of terror financing activities.”
Restoring integrity in the financial system
SARS also issued a positive statement commending the FATF delisting as a significant moment for the country and a testament to the whole-of-government approach to restore the integrity of the financial system. “We recognise that removing the designation of grey listing is not a finish line but a milestone on a long-term journey toward building a robust and resilient financial ecosystem,” noted SARS Commissioner Edward Kieswetter, before reflecting on some of the measures introduced by the tax revenue collection agency.
Top of the list, and something South Africa’s financial advising community should take note of, is that SARS, working with a long list of other enforcement agencies, has strengthened its financial intelligence-gathering capabilities and increased investigations and asset preservation and recovery in relation to tax and customs crime, especially matters involving complex money laundering and terror financing schemes. Although directed at major criminal transgressions, there is growing evidence that SARS’ data-gathering and monitoring capabilities can be leveraged across the taxpayer base.
Another major SARS intervention saw the introduction of beneficial ownership (BO) reporting obligations for legal persons and trusts, alongside improved access to accurate and up-to-date BO information. You and your clients may view BO as yet another pesky administrative requirement, but enforcement agencies see it as a vital tool in identifying the receiving entities of illicit fund flows.
Finally, from early 2026, you can expect the rollout of a SARS Traveller Management System to facilitate the declaration of cash and bearer negotiable instruments (BNIs) on entry and exit at all borders, enabling information sharing with the Financial Intelligence Centre (FIC).
The investment taps will not open
“The FATF decision is an important data point for those who are looking for concrete evidence that South Africa can remove obstacles hampering business and investment through action, not only policy announcements,” noted BASA in its concluding paragraph. They warned against complacency, saying that the country’s capacity to fight financial crime will be monitored and evaluated by the FATF on an ongoing basis, starting with its next review cycle in 2026.
SARS is painfully aware of this reality too. “The fight against financial crime and corruption is a continuous one,” said Kieswetter. “SARS remains committed to upholding the highest standards of financial integrity and, as we approach the new round of FATF review commencing in the latter part of 2026, SARS will work relentlessly to ensure that we do what is required to combat the illicit economy.”
Of course, the mere removal from a list does not mean you can expect a flood of inward investment. “A grey listing is by no means the only obstacle to attracting foreign capital; there is still the global and local economic backdrop to contend with,” concluded Robotham. “Sustained financial hygiene, coupled with economic stability, is required for ongoing international flows.”
Writer’s thoughts:
Our removal from the FATF grey list may restore investor confidence, but it is unlikely to ease the compliance burden on financial advice practices. Do you expect any relaxation of the KYC and other regulatory checks introduced to tackle AML-CFT? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
