Will October 2025 See The End Of South Africa's Greylisting Headache?

South Africa's greylisting by the Financial Action Task Force ("FATF") in February 2023 marks a challenging period for the country. This placement was due to non-compliance in its legal framework with international standards relating to anti-money laundering and counter-terrorist financing.

Background

Being greylisted has serious adverse effects on a country's economic and foreign investment environment, and overall financial performance. One of the most significant impacts South Africa has experienced is reputational damage, which can lead to, inter alia, an increase in borrowing costs, and reduced foreign direct investment.

At the beginning of 2025, the FATF announced that South Africa had addressed 20 out of the 22 actions items as outlined in the agreed Action Plan undertaken when it was placed on the grey list more than two years ago. The 22 action items relate to eight identified deficiencies in its Anti-Money Laundering/Countering the Financing of Terrorism ("AML/CFT") system. As of February 2025, the outstanding action items were:

• IO7- "South Africa should demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering, in particular involving professional money laundering networks/enablers and third-party Money Laundering in line with its risk profile";and
• IO9(4)- "South Africa should demonstrate a sustained increase in the effective identification, investigation and prosecution of the full range of Terrorist Financing activities, consistent with its Terrorist Financing risk profile".

South Africa addressed key areas relating to the Action Plan through amendments to existing legislation and the introduction of new legislation, including:

• Signing into law the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 law in December 2022, which amended several key pieces of legislation, including the Financial Intelligence Centre Act ("FICA"), the Companies Act, and the Trust Property Control Act. The effect of these amendments: Expanded the list of "accountable institutions" required to comply with FICA.The list now includes credit providers, high-value goods dealers and crypto asset service providers.
• Introducing stricter requirements for companies and trusts to record and report information regarding their beneficial owners, increasing the transparency of asset ownership; and
• Broadening the definition of Politically Exposed Persons, increasing the scope of individuals subject to enhanced due diligence measures. Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act, 2022: Also signed into law in December 2022, this amendment was aimed at strengthening the legal framework for combating the financing of terrorism and proliferation.

Addressing the 22 actions items has required a monumental effort from the South African law enforcement authorities and regulators. Some of these efforts aimed at removing South Africa off the grey list are discussed below.

A common thread between the two outstanding action items is the 'prosecution' of serious and complex money laundering, and the full range of Terrorist Financing Activities. Although these 2 action items were outstanding as of February 2025, South Africa has made huge progress in prosecuting high profile matters which include:

• The VAT Fraud Syndicate: 9 individuals were sentenced in April 2024 for a cumulative of 10,939 years' imprisonment for a complex scheme involving fraud, forgery, and 391 counts of money laundering. The syndicate submitted fraudulent VAT returns to the South African Revenue Services ("SARS") and prejudiced the state in the amount of ZAR300 million.
• Mark Vorster: in 2023, Mark Vorster was convicted in the Pretoria Specialised Commercial Crimes Court for 11 counts of fraud, two years' imprisonment for theft, and four years for money laundering, worth more than ZAR800 000.
• Mosebetsi Samuel Mosia: In April 2023, Mosebetsi Samuel Mosia and his company, Elegant Line Trading 570 CC, were found guilty of contravening the Tax Administration Act. While this was not an exclusive money laundering conviction, the case involved the misrepresentation of tax returns that led to a loss of over ZAR1 million to SARS.

The Prudential Authority ("PA") Annual Report 2024/2025, published on 30 June 2025, stated that the PA had applied effective, proportionate and dissuasive sanctions for non-compliance with the FICA. Remedial actions undertaken by supervised institutions were also monitored. The PA Annual Report indicated that these efforts contributed to the enforcement of one South Africa's actions items. Examples include:

• Capitec Bank: On 20 December 2024, the PA imposed a fine in the amount of ZAR56.25 million for numerous FICA violations.
• Standard Bank of South Africa: In January 2025, Standard Bank was fined a total of ZAR13 million for FICA non-compliance.
• Grindrod Bank (now African Bank): In December 2023, the PA imposed a financial penalty of ZAR10.73 million, including a ZAR5 million portion suspended for 24 months, subject to the bank addressing the identified non-compliance.

On 3 September 2024, the National Prosecuting Authority ("NPA") released its 2023/2024 Annual Report. In the report, the National Director of Public Prosecutions ("NDPP") stated that the Investigating Directorate, a specialised unit within the NPA established to investigate and prosecute complex corruption and state capture-related matters, authorised 117 matters involving 212 accused persons and 68 entities. From these 117 matters, 78 are under investigation with 39 cases are being enrolled. The NDPP further noted that South Africa is one of the very few countries prosecuting senior government officials (including former Ministers) and private sector players for complex corruption and related offences.

The 2023/2024 NPA Annual Report also states that in the last five years, almost 700 government officials and over 1000 private sector individuals have been convicted of corruption. In addition, four cases have been enrolled that relate to the 16 recommendations from the Zondo Commission. The recommendations of the Zondo Commission on State Capture have been critical in the post-grey listing law enforcement efforts. The NPA have been actively pursuing these cases involving complex money laundering schemes, which include:

• The Free State Asbestos Project: In March 2025, a preservation order was granted for six properties worth ZAR32 million, and a Mercedes-Benz G63 AMG worth ZAR2 million, purchased with proceeds of unlawful activities related to the asbestos project. This followed a previous ZAR300 million restraint order in the same case in 2020. The preservation order aims to prevent the dissipation of assets and pave the way for their forfeiture to the state. This action is part of a broader effort that has seen the NPA's Asset Forfeiture Unit place over ZAR10.6 billion in assets under restraint or preservation orders.
• Asset Forfeiture has reported significant success in asset recovery, with total recoveries now reaching nearly ZAR11 billion as of mid-2025. Major recoveries have been secured with international companies that have been implicated in corruption and money laundering. These recoveries represent a significant recovery of illicit funds.

According to the FIC's 2023/24 annual report, the FIC has facilitated several investigations into diverse financial crimes, including kidnapping and ransom, drug trafficking, illegal gold mining, Politically Exposed Persons and wildlife tracking. This report further noted that the FIC assisted SARS with the rollout of a technology platform that enables local and international travellers to declare goods, currency and bearer negotiable instruments at all international airports, two land border posts and one seaport. This implementation was necessary for South Africa to meet international standards and exit the grey list. The FIC also indicated that it had successfully recruited competent individuals to meet the capacity requirements for addressing the country's grey listing.

On 13 June 2025, the FATF announced that South Africa has substantially addressed all 22 action items. This progress is due to improved regulatory compliance, stronger supervision and a more effective implementation of beneficial ownership requirements. This achievement qualified South Africa for an on-site assessment by the FATF, a critical and prerequisite step in being removed off the grey list. From 29 to 30 July 2025 in Pretoria, the FATF Joint Group concluded its on-site assessment. A report will be submitted to the October 2025 FATF Plenary for a final decision on South Africa's status.

As South Africa awaits the results with cautious optimism, it is clear that positive strides have been made. We will provide another update when the FATF Joint Group report is released.

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