What does South Africa’s Grey Listing mean?

Issue 2/3 2023 Financial (Industry), Security Services & Risk Management


Terence Naidu.

South Africa’s recent Grey Listing by the Financial Action Task Force (FATF) has caused a great deal of concern for South African businesses and individuals. This decision, made on 24 February 2023, has noted the country’s lack of progress in combatting money laundering and terrorist financing. The FATF is an international organization that works to set standards, strengthen global anti-money laundering and counter-terrorist financing efforts, and promote effective implementation of legal, regulatory and operational measures for these purposes.

The FATF’s decision to place South Africa on its Grey List is significant. South Africa is now one of only twenty-three countries on the list, along with Nigeria. The Grey List is considered a warning for countries that have failed to take adequate steps to address the FATF’s concerns about money laundering and terrorist financing.

The consequences of South Africa's grey listing by the Financial Action Task Force (FATF) could be severe for South African businesses and individuals. Here are a few ways in which it can affect them:

1. Increased costs: The first, and most pressing issue, is the increased risk of money laundering and terrorist financing that results in higher costs. The FATF's grey listing can increase the cost of doing both local and international business for South African companies, as banks and other financial institutions may raise their fees or impose regulations that are more stringent. This could lead to higher prices for goods and services, which can affect the cost of living for ordinary South Africans. Companies may also be required to perform more stringent due diligence procedures on their customers, and may need to report more transactions to the authorities.

2. Difficulty accessing finance: Financial institutions may become more cautious about lending money to South African businesses or individuals. This can make it more difficult for ordinary South Africans to access credit, whether for personal or business purposes. Banks may start to impose stricter requirements on customers, such as higher minimum balances and more stringent identity verification. Businesses may also be more reluctant to enter into transactions with South African citizens, making it harder for individuals to access credit and other financial services.

3. Impact on the economy: The grey listing can have an impact on South Africa's economy as a whole. It can lead to a decrease in foreign investment in South Africa. Foreign investors may be wary of doing business in a country that is perceived to have lax laws and regulations. This could lead to a decrease in the availability of capital, which could hamper economic growth and potentially cause job losses at a time when South Africa is faced with record high unemployment. All of these factors can indirectly affect the lives of ordinary South Africans.

4. Reputational damage: Being on the FATF's grey list can also have reputational consequences for South Africa in the international community. It can lead to a loss of confidence in the country's financial system, which can affect how the international community perceives South Africa. This could make it difficult for South African companies to do business abroad, as well as reduce the country’s attractiveness as a destination for foreign investment.

In summary, South Africa's grey listing can indirectly affect ordinary South Africans through increased costs, difficulty accessing finance, impact on the economy, and reputational damage.

The only piece of encouraging news is that South Africa can apply for removal from its Grey Listing after it implements the necessary reforms to comply with the international standards on combating money laundering and terrorist financing. The Financial Action Task Force (FATF) will assess the reforms and determine whether South Africa is eligible for removal from the list. The faster these reforms are implemented, the sooner South Africa can have its grey listing removed.

At the same time as South Africa and Nigeria were added to the FATF’s Grey List, Morocco and Cambodia were removed from the list for implementing the FATF’s necessary reforms. With the political will, South Africa can be removed from the Grey List.

As a reputable and responsible financial services provider, Truzo has already implemented strict controls when on-boarding its clients, with on-going transaction monitoring to ensure continuous compliance. Are your service providers doing the same?

For more information, go to www.truzo.com




Share this article:
Share via emailShare via LinkedInPrint this page



Further reading:

Local manufacturing is still on the rise
Hissco Editor's Choice News & Events Security Services & Risk Management
HISSCO International, Africa's largest manufacturer of security X-ray products, has recently secured a multi-continental contract to supply over 55 baggage X-ray screening systems in 10 countries.

Read more...
Detecting humans within vehicles without opening the doors
Flow Systems News & Events Security Services & Risk Management
Flow Systems has introduced its new product, which detects humans trying to hide within a vehicle, truck, or container. Vehicles will be searched once they have stopped before one of Flow Systems' access control boom barriers.

Read more...
Cybercriminals embracing AI
Information Security Security Services & Risk Management
Organisations of all sizes are exploring how artificial intelligence (AI) and generative AI, in particular, can benefit their businesses. While they are still figuring out how best to use AI, cybercriminals have fully embraced it.

Read more...
Integrate digital solutions to reduce carbon footprint
Facilities & Building Management Security Services & Risk Management
As increasing emphasis is placed on the global drive towards net zero carbon emissions, virtually every industry is being challenged to lower its carbon footprint and adopt sustainable practices.

Read more...
Deception technology crucial to unmasking data theft
Information Security Security Services & Risk Management
The ‘silent theft’ of data is an increasingly prevalent cyber threat to businesses, driving the ongoing leakage of personal information in the public domain through undetected attacks that cannot even be policed by data privacy legislation.

Read more...
Proactive strategies against payment fraud
Financial (Industry) Security Services & Risk Management
Amid a spate of high-profile payment fraud cases in South Africa, the need for robust fraud payment prevention measures has never been more apparent, says Ryan Mer, CEO of eftsure Africa.

Read more...
How to prevent and survive fires
Fire & Safety Security Services & Risk Management
Since its launch in August 2023, Fidelity SecureFire, a division of the Fidelity Services Group, has been making significant strides in revolutionising fire response services in South Africa.

Read more...
A long career in mining security
Technews Publishing Editor's Choice Security Services & Risk Management Mining (Industry)
Nash Lutchman recently retired from a security and law enforcement career, initially as a police officer, and for the past 16 years as a leader of risk and security operations in the mining industry.

Read more...
Risk management: There's an app for that
Editor's Choice News & Events Security Services & Risk Management
Zulu Consulting has streamlined the corporate risk management process with the launch of Risk-IO, a web-based app designed to consolidate and guide risk managers through the process, monitoring progress as one proceeds.

Read more...
Integrated information platform for risk management
Editor's Choice News & Events Security Services & Risk Management
Online Intelligence recently launched version 7 of its CiiMS risk and security platform. Speaking to SMART Security Solutions after the launch event, the company’s Arnold van den Bout described the enhancements in version 7.

Read more...