South Africa given a year to get its financial house in order

Oct 25, 2021 | Financial Planning, South African Expats

FATF warns South Africa has a year to put its house in order on money laundering and terrorist financing.

South Africa grey list threat

The Financial Action Task Force (FATF) is the international community’s powerful money laundering and terrorist financing watchdog and policeman. Since April 2019, it has been conducting a mutual assessment with the South African government into the country’s measures to counter international money laundering and terrorist financing.

This month’s report makes for uncomfortable reading, concluding that South Africa’s financial system is ‘exposed to the laundering of domestic crime proceeds and foreign crime proceeds from the region. It is also exposed to terrorism financing risks associated with foreign terrorism, foreign terrorist fighters (FTFs), and potential domestic terrorism.’

It goes on to say that the country’s law enforcement agencies, ‘ lack the skills and resources to proactively investigate money laundering or terrorist financing’, and investigations are, ‘not really occurring.’

This is a damaging report that should concern all South Africans.

The report gives the government a year to initiate 40 recommendations from the FATF.  It must improve the availability of beneficial ownership information, enhance the application of risk-based approach by businesses and supervisors and close gaps in sectoral coverage.

The FATF has indicated that failure to comply will lead to South Africa being added to its ‘grey list’ of countries requiring increased international monitoring regarding financial transactions, alongside countries like Syria, Haiti, Pakistan and Uganda.

This would devastate South Africa’s economy and financially damage all South Africans.

If you are concerned about how this will affect your finances, please book a call with Michele to discuss your personal circumstances and find out how we can help.

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