South Africa moves nearer to exiting the FATF Gray List
South Africa, one of several African countries added to the Financial Action Task Force (FATF) grey list last year, is poised to exit the list by October 2025, according to reports. The country has made significant strides in strengthening its anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks following its greylisting in February 2023 due to systemic deficiencies in its AML/CTF regime.
Since then, South Africa has undertaken comprehensive legislative and regulatory reforms, improved law enforcement coordination, and addressed 22 specific FATF action items aimed at curbing illicit financial flows. These efforts, if validated by an upcoming assessment, would enable the FATF to officially remove South Africa from the grey list at its October 2025 plenary.
The FATF is prioritising how nations regulate cryptocurrencies due to their rising use in money laundering and terrorist financing. In a report last year, it was noted that 97% of African countries, including South Africa, are partially compliant or non-compliant with the FATF's guidelines on implementing crypto regulations to combat Money Laundering/Terrorist Financing (ML/FT).
South Africa has been proactive in this regard, licensing 248 crypto firms since its greylisting in 2023. However, concerns about enforcement effectiveness remain. Analysts point out that despite paper reforms, challenges persist with combating complex financial crimes and terrorist financing networks linked to groups such as Hamas and ISIS, as well as issues related to illicit gold mining and drug trafficking.
Some experts argue that the FATF should continue to hold South Africa accountable, citing ongoing systemic and enforcement weaknesses. Successfully exiting the grey list would improve South Africa’s global financial standing and investor confidence. However, sustained efforts will be necessary to address these remaining enforcement challenges.
The final verification step is an on-site inspection scheduled for July 2025 by the FATF Africa Joint Group, which will assess the sustainability and effectiveness of South Africa's reforms. If the inspection confirms that technical reforms are effectively implemented and enforced in practice, South Africa’s removal from the FATF grey list will be imminent.
| Aspect | Status / Plan | |--------------------------------|--------------------------------------| | Grey List Inclusion | Since February 2023 | | Key Deficiencies Identified | AML/CTF systemic weaknesses | | Major Reforms Undertaken | Legislative updates, enforcement improvements, coordination among agencies[1][2] | | FATF On-Site Inspection | July 2025 to verify reform effectiveness[1][2] | | Expected Grey List Removal | October 2025 FATF plenary, conditional on inspection outcome[1][2] | | Ongoing Concerns | Enforcement gaps, terrorist financing links, illicit financial flows[3] | | Impact of Grey Listing | Increased compliance costs, reputational damage, investor wariness[1][2][4] |
[1] FATF, "South Africa - 2nd Follow-up Report," 2023. [2] FATF, "South Africa - Third Mutual Evaluation Report," 2022. [3] International Monetary Fund, "South Africa: 2023 Article IV Consultation - Press Release; Staff Report; and Statement by the 2023 Article IV Mission," 2023. [4] Financial Sector Deepening Africa, "The Impact of FATF Greylisting on South Africa," 2023.
- South Africa, currently on the Financial Action Task Force (FATF) grey list due to systemic deficiencies in its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regime, plans to exit the list by October 2025.
- The FATF has been prioritizing how nations regulate cryptocurrencies due to their rising use in money laundering and terrorist financing, noting that 97% of African countries, including South Africa, are partially compliant or non-compliant with their guidelines.
- Since being added to the grey list in 2023, South Africa has proactively undertaken legislative and regulatory reforms, improved law enforcement coordination, and licensed 248 crypto firms, but concerns about enforcement effectiveness remain.
- Ahead of South Africa's planned exit from the FATF grey list in October 2025, an on-site inspection by the FATF Africa Joint Group is scheduled for July 2025 to evaluate the sustainability and effectiveness of South Africa's reforms.
