Updated: Sep 2
The FATF's grey list is something that the Governor of South Africa's Central Bank has pleaded with officials to avoid.
After FATF set an October deadline for the government to strengthen its AML/CFT defenses, Lesetja Kganyago warned lawmakers on Wednesday that the detrimental economic effects of a grey listing would be "massive," according to Bloomberg.
South Africa could join the list of 23 countries with "strategic deficiencies," which also includes Pakistan, Syria, South Sudan, Turkey, and Myanmar, if it fails to do so.
"We have got to be able to treat this with urgency and demonstrate significant progress so that we could actually prevent a grey listing," he said, "or if we should be grey listed, we can come off that grey list within 12 months."
He continued, "The country’s risk premium has already risen and not purely on this, so the implications for the economy are massive."
The South African National Treasury Director General issued a warning in July, stating that, the country was "almost certainly headed to be grey listed" unless they could "perform a few miracles."
"Given the grey listing we face, the sooner we do things, the better for us," said Ismail Monomiat at the joint meeting of the standing and select committees on finance of the South African Parliament. He also cautioned that the nation was "well behind" current international AML and CFT standards.
AML defenses in South Africa are now failing, according to a 238-page report published by FATF in October of last year. According to the body's executive statement, the nation "suffered from a sustained period of ‘state capture’ which helped to generate substantial corruption proceeds and undermined key agencies with roles to combat such activity."
The organization came to the conclusion that South Africa had a "solid legal framework" to combat money laundering and terrorist funding, but also had "serious shortcomings" in terms of putting an efficient system in place and failing to prosecute serious cases, among other things.
By fLEXI tEAM