World News | FATF puts South Africa, Nigeria on ‘grey list’

JOHANNESBURG, Feb 24 (PTI) – The global anti-money laundering watchdog FATF on Friday placed South Africa and Nigeria on its “grey list” of countries that have failed to combat money laundering and terrorism financing, a setback for Africa’s two largest economies.

The decision by the Paris-based Financial Action Task Force (FATF) showed global banks, financial institutions and investors that the countries were not fully complying with anti-money laundering and terrorist financing standards.

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This is the case despite South Africa’s desperate attempt to pass several relevant laws late last year, and recently sent a high-level delegation to the FATF.

The FATF acknowledged that South Africa had made significant progress on many of its previous recommendations to the country, but was stepping up investigations and prosecutions related to money laundering cases and the confiscation of assets that were the proceeds of criminal activity.

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“When the FATF places a jurisdiction under enhanced surveillance, it means that the country has committed to addressing identified strategic deficiencies expeditiously within an agreed time frame and is subject to enhanced surveillance.” FATF published after its Paris meeting The list is often referred to externally as the “grey list,” said a statement from China.

The FATF has continually identified other jurisdictions with strategic deficiencies in their anti-money laundering, terrorism financing and proliferation financing regimes, the statement said.

“In February 2023, South Africa made a high-level political commitment to work with the FATF and strengthen the effectiveness of its anti-money laundering (AML) and countering the financing of terrorism (CFT) regime.

“Since its adoption in June 2021, South Africa has made significant progress on a number of (recommendations) to improve its systems, including the development of a national AML/CFT policy to address heightened risks and newly revised laws framework, among others,” the statement added.

The FATF listed eight areas that South Africa still needs to work through in order to remove it from the greylist.

These include South African authorities imposing effective, proportionate and effective sanctions for non-compliance; demonstrating a continued increase in investigations and prosecutions of serious and sophisticated money laundering; enhancing the identification, seizure and confiscation of proceeds of crime; ensuring that targeted financial sanctions are met effective implementation.

In recent years, the South African police, prosecution and justice system have been hampered by limited budgetary allocations to carry out these tasks.

The additional budget allocation to these authorities was announced by Finance Minister Enoch Godonwana in his annual budget speech on Wednesday.

He also suggested at the time that the gray list was to be expected and that the country had to “prepare for that possibility”.

Responding to the FATF announcement, Godongwana pledged in a statement on Friday that South Africa would “expeditiously and efficiently” resolve all outstanding issues listed by the FATF.

“The government recognizes that addressing the action items will be in South Africa’s interest, and doing so is in line with our existing commitment to rebuild institutions that were weakened during the seizure of the country, the effectiveness of which is critical to tackling crime and corruption,” Godung Varner said.

Analysts say the gray list will affect foreign direct investment in South Africa and make it harder for struggling state-owned entities such as state electricity provider Eskom and public transport network Transnet to borrow money from abroad.

South Africa is the second G20 economy to join the FATF gray list after Turkey. Iran, North Korea and Myanmar are blacklisted.

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)