SA off the grey list, but still in the shadows

Most South Africans would be surprised, perhaps even incredulous, to learn that the country has been removed from the Financial Action Task Force (FATF) grey list. With police capture, tender fraud, cosy relationships with rogue states and terrorist organisations, and the continued impunity of implicated officials, it hardly feels as if South Africa is suddenly on a path toward financial probity. 

The FATF’s grey list identifies countries with “strategic deficiencies” in combating money laundering and terrorist financing. South Africa was placed on it in February 2023, following years of weak enforcement and deliberate institutional decay. Reserve Bank Governor Lesetja Kganyago has described grey listing as both reputationally damaging and financially costly. According to an International Monetary Fund study, the so-called “time-out” probably reduced South Africa’s gross foreign capital inflows by an estimated $50 billion to $110 billion over the past 30 months. Its removal, announced last week at the FATF plenary in Paris, is a welcome development but it’s far too early to declare victory against financial crime and corruption. 

South Africa has now met all 22 technical requirements to exit the list, including improved financial intelligence sharing; tighter regulations; beneficial ownership registers; and strengthened supervisory frameworks for banks and professionals. Yet these are procedural achievements, not evidence of transformative change. The bar is low: countries like Mozambique, Nigeria, and Burkina Faso were also taken off the grey list alongside South Africa. 

There have been some measurable improvements. In 2024/25, the Financial Intelligence Centre logged roughly 13.5 million regulatory reports. Enforcement activity has increased, with Anti-Money Laundering (AML) fines rising from R25 million in 2022 to R175 million in 2024; and a 50% increase in prosecutions by the National Prosecuting Authority’s dedicated AML/CFT (Countering the Financing of Terrorism) unit. Yet this is off a very low base: the rise represents an increase from just 65 to 98 cases, and not every case resulted in a conviction. Broader commercial-crime convictions actually fell by 10% to 333 over the same period. Meanwhile, the politically connected remain untouched: of the 95 senior African National Congress (ANC) figures named in the Zondo Commission, not one has faced meaningful repercussions in court. 

Pretoria also continues to turn a blind eye to terror financing – a core FATF concern. The ANC maintains close ties to Hamas, while groups linked to the organisation, such as the Al-Quds Foundation, continue to operate freely and fundraise with impunity. Earlier this year, a United States-sanctioned Islamic State cell leader even attempted to form an Islamic State of Africa political party in South Africa. With porous borders and weak oversight, South Africa remains a haven for extremist networks to launder funds and facilitate terrorism, precisely the vulnerabilities that grey listing is meant to address. 

South Africa’s institutions are ill-equipped to tackle these threats. In an environment where five prosecutors have been murdered in five years, and nearly 150 municipal employees assassinated, the notion that South Africa is winning the fight against financial crime strains credulity. Prosecuting authorities and financial intelligence services lack resources, while courts remain overloaded. Worse, because of political interference, successful investigative units are the ones that are shut down. 

While the FATF may have restored South Africa’s financial hechsher, many of its leading trade partners remain unconvinced. Just last month, the US placed South Africa on its Tier 2 Watch List for human trafficking, while the US-South Africa Bilateral Relations Review Act (H.R.2633), which could result in Magnitsky sanctions on senior ANC officials, continues to advance through Congress. 

The World Bank estimates that crime and corruption cost South Africa up to 10% of gross domestic product each year, a staggering self-inflicted wound. Exiting the grey list may ease regulatory pressure, but it won’t rebuild trust, attract investment, or restore integrity. Real progress demands more than compliance checklists: it requires accountability at the highest levels, independent institutions, and a decisive break from the criminal and ideological networks hollowing out the state. 

Until South Africa confronts these entrenched interests with courage and conviction, it will remain what it has become: a country off the grey list, but still trapped in the financial shadows. 

• Michael Kransdorff is chief executive officer of the Institute of International Tax and Finance.