FATF status

South Africa is on the FATF List of Countries that have been identified as having strategic AML deficiencies

Latest FATF Statement  -  23 February 2024

Since February 2023, when South Africa made a high-level political commitment to work with the FATF and ESAAMLG to strengthen the effectiveness of its AML/CFT regime, South Africa has taken steps towards improving its AML/CFT regime including by addressing technical deficiencies in its targeted financial sanction regime related to terrorism financing, increasing the use of financial intelligence from FIC to support ML/TF investigations and increasing the resources of AML/CFT supervisors. South Africa should continue to work on implementing its action plan to address its strategic deficiencies, including by: (1) demonstrating a sustained increase in outbound mutual legal assistance (MLA) requests that help facilitate ML/TF investigations and confiscations of different types of assets in line with its risk profile; (2) improving risk-based supervision of DNFBPs and demonstrating that all AML/CFT supervisors apply effective, proportionate, and effective sanctions for noncompliance; (3) ensuring that competent authorities have timely access to accurate and up-to-date BO information on legal persons and arrangements and applying sanctions for breaches of violation by legal persons to BO obligations; (5) demonstrate a sustained increase in investigations and prosecutions of serious and complex money laundering and the full range of TF activities in line with its risk profile; (6) enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes, in line with its risk profile; (7) updating its TF Risk Assessment to inform the implementation of a comprehensive national counter financing of terrorism strategy; and (8) ensuring the effective implementation of targeted financial sanctions and demonstrating an effective mechanism to identify individuals and entities that meet the criteria for domestic designation.

Compliance with FATF Recommendations

The last follow-up Mutual Evaluation Evaluation relating to the implementation of anti-money laundering and counter-terrorist financing standards in South Africa was undertaken in 2023. According to that Evaluation, South Africa was deemed Compliant for 5 and Largely Compliant for 29 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness Compliance ratings.

US Department of State Money Laundering assessment (INCSR)

South Africa was last deemed a Jurisdiction of Primary Concern in the US Department of State 2018 International Narcotics Control Strategy Report (INCSR). The Overview from that report was as follows: -

South Africa’s position as the financial center of the continent, its sophisticated banking and financial sector with a high volume of transactions, and its large, cash-based market make it a target for transnational and domestic crime syndicates. The Financial Intelligence Centre (FIC), South Africa’s FIU, works closely with other governmental organizations on AML enforcement. The Illicit Financial Flows Task Team (FTT), composed of six agencies, including a U.S. law enforcement representative, coordinates a national approach to investigate and prosecute money laundering activities. President Zuma signed an amendment to the Financial Intelligence Centre Act, 2001 (FICA) in April 2017, and in October 2017, the FIC, in collaboration with the National Treasury, the South African Reserve Bank (SARB), and the Financial Services Board, published guidance to implement the new law.

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                          41

World Governance Indicator – Control of Corruption             45

South Africa suffers from widespread corruption, despite it performing better than regional averages across a number of key measurements. The country has simpler procedures, smoother interactions with tax officials and easier enforcement of commercial contracts than comparable regional countries. It has a robust anti-corruption framework, but laws are inadequately enforced. Public procurement is particularly prone to corruption, and bribery thrives at the central government level. The Prevention and Combating of Corruption Act (PCCA) criminalises corruption in public and private sectors, including attempted corruption, extortion, active and passive bribery, bribing a foreign public official, fraud and money laundering, and it obliges public officials to report corrupt activities. As it is a criminal offence to provide any form of "gratification" to an official if it is not lawfully due, companies are advised to refrain from giving gifts or exchanging facilitation payments.  For further information - GAN Integrity Business Anti-Corruption Portal

South Africa boasts the most advanced, broad-based economy in sub-Saharan Africa. The investment climate is fortified by stable institutions; an independent judiciary and robust legal sector that respects the rule of law; a free press and investigative reporting; a mature financial and services sector; and experienced local partners.

In dealing with the legacy of apartheid, South African laws, policies, and reforms seek economic transformation to accelerate the participation of and opportunities for historically disadvantaged South Africans. The Government of South Africa (GoSA) views its role as the primary driver of development and aims to promote greater industrialization, often employing tariffs and other trade measures that support domestic industry while negatively affecting foreign trade partners. President Ramaphosa’s October 2020 Economic Reconstruction and Recovery Plan unveiled the latest domestic support target: the substitution of 20 percent of imported goods in 42 categories with domestic production within five years. Other GoSA initiatives to accelerate transformation include labor laws to achieve proportional racial, gender, and disability representation in workplaces and prescriptive government procurement requirements such as equity stakes and employment thresholds for historically disadvantaged South Africans. In January 2022, the World Bank approved South Africa’s request for a $750 million development policy loan to accelerate the country’s COVID-19 response. South Africa previously received $4.3 billion from the International Monetary Fund in July 2020 for COVID-19 response. This is the first time that the institutions have supported South Africa’s public finances/fiscus since the country’s democratic transition.

In November 2021 at COP 26 the GoSA, the United States, the UK, France, Germany, and the European Union (EU) announced the Just Energy Transition Partnership (JETP). The partnership aims to accelerate the decarbonization of South Africa’s economy, with a focus on the electricity system, to help achieve the ambitious emissions reduction goals laid out in South Africa’s Nationally Determined Contribution (NDC) in an inclusive, equitable transition. The partnership will mobilize an initial commitment of $8.5 billion over three-to-five years using a variety of financial instruments. In November 2022 the GoSA announced the Just Energy Transition Investment Plan (JET IP) for the five-year period 2023-2027 which sets out the scale of need and the investments required to achieve the decarbonization commitments in the country’s Nationally Determined Contribution (NDC).

South Africa continues to suffer the effects from a “lost decade” in which economic growth stagnated, hovering at zero percent pre-COVID-19, largely due to corruption and economic mismanagement. South Africa suffered a four-quarter technical recession in 2019 and 2020 with economic growth registering only 0.2 percent growth for the entire year of 2019 and contracting -6.4 percent in 2020. The economy grew by 4.9 percent in 2021 and shrunk by 1.3 percent in 2022. South Africa’s unemployment rate improved by 2.2 percentage points from 34.9 percent in 2021 to 32.7 percent in December 2022.

One of the biggest challenges to investment is persistent “loadshedding,” South Africa’s term for rolling blackouts. The country experienced loadshedding more than 200 days in 2022 and almost every day thus far in 2023. Lack of access to reliable power cripples economic growth and is a top concern for investors. The International Monetary Fund (IMF) recently downgraded its GDP expectations for South Africa’s economy to 0.1 percent in 2023. However, the South African Reserve Bank lowered its forecast for GDP growth in 2023 from about 2.6 percent to 0.3 percent. Other challenges include policy uncertainty, lack of regulatory oversight and enforcement, state-owned enterprise (SOE) drain on the fiscus, widespread corruption, violent crime, labor unrest, lack of basic infrastructure and government service delivery and lack of skilled labor.

The Ukraine-Russia conflict has negatively affected the South African economy to a much lesser degree than countries reliant on Russian energy and Russian and Ukrainian food exports and agricultural inputs. The war primarily exacerbates existing supply chain bottlenecks and inflationary pressures through higher energy, fertilizer costs, and food prices, which reduces discretionary income and food security and has resulted in public demonstrations against rising cost of living.

Moody’s overall investment outlook for South Africa is stable but rates South Africa’s sovereign debt as sub-investment grade. In November 2022, Fitch affirmed South Africa’s credit ratings at junk status with a stable outlook. S&P in May 2022 upgraded its overall investment outlook to positive from stable, citing an improved fiscal trajectory. In November 2022, it maintained its positive outlook on South Africa, as the agency expects that a net external creditor position and the implementation of some structural reforms could lead to an easing of economic pressures. In March 2023, S&P downgraded South Africa’s status from positive back to stable due to the impact of persistent electricity shortages and infrastructure constraints on economic growth, only weeks after South Africa was grey-listed by FATF in February.

Despite structural challenges, South Africa remains a destination conducive to regional U.S. investment in Africa, the fastest growing consumer market in the world. Google (US) invested approximately $140 million, and PepsiCo invested approximately USD 1.5 billion in 2020. Ford announced a $1.6 billion investment, including the expansion of its Gauteng province manufacturing plant in January 2021.

​Country Links

Financial Intelligence Centre (FIC)​

South African Reserve Bank