Greylisting 'concerning but less dire than some suggest': Ramaphosa

President Cyril Ramaphosa describes the country’s greylisting as “concerning, but less dire than some suggest”.

The president also argues that the country's greylisting is an opportunity to fight financial crimes.

International financial crime watchdog the Financial Action Task Force (FATF) said on Friday it was adding South Africa and Nigeria to its so-called “grey list” of countries under special scrutiny to implement standards to prevent money laundering and terrorism financing.

The FATF is an international body that fights financial crimes such as money laundering and terrorism financing by setting global standards monitoring country compliance.

Ramaphosa, admitting that the country fell short of certain international standards for the combating of money laundering and other serious financial crimes, said South Africa had been a member of the FATF for at least 20 years, indicating its commitment to fighting these criminal activities at home and internationally.

“The listing of South Africa as a ‘jurisdiction under increased monitoring’ — commonly known as greylisting — has caused much concern about the state of our financial institutions, law enforcement agencies and investment environment. The situation is concerning but less dire than some people suggest,” said Ramaphosa.

The government has gone through a rigorous process of addressing the issues the FATF has raised, he said.

“The fundamentals are in place, and we know what we need to do to get off the grey list. We are determined to do this as quickly as possible. This is important not only for our international standing but also for our own ability to fight these crimes in our country.”

Ramaphosa urged the nation to note that the strategic deficiencies identified by the task force did not relate directly to the country’s financial sector, and therefore the country’s financial stability and costs of doing business with the country would not be “seriously impacted”.

“Partnerships between government and the financial sector have played a valuable role in efforts to address serious economic crimes. The South Africa Anti-Money Laundering Integrated Task Force was set up in 2019 as a partnership between the banking sector and government regulatory authorities. Between the beginning of 2020 and the end of March 2022, successful interventions by the task force led to the preservation of criminal assets worth R86m.”

He said South Africa, like other countries, was dealing with the shifting sands of globalised crime and criminal syndicates, and thus welcomed the intensified monitoring by the FATF.

“The challenge facing authorities is to anticipate criminal innovation and to respond swiftly and effectively. We have a focused action plan in place to address the remaining deficiencies identified by the FATF. Most of these relate to the implementation of our laws,” said the president.

He said since the dawn of democracy, the government has sought to build credible, independent institutions and implement effective laws to deal with complex financial crimes of this nature.

“We have also forged collaborative relationships with transnational entities and global bodies in the financial sector, including the FATF and Interpol.

“During South Africa’s last regular mutual evaluation of its measures to combat money laundering and the financing of terrorism, a number of deficiencies were identified.” 

The mutual evaluation was conducted in 2019, he said, when the country was emerging from the state capture era, which had a particularly detrimental impact on institutions like the South African Revenue Service (Sars), the National Prosecuting Authority (NPA) and the Hawks.

“Since the results of the mutual evaluation were published in 2021, we have made great progress in addressing the identified shortcomings. Of the 67 recommended actions emanating from the mutual evaluation, we have successfully addressed all but eight strategic deficiencies.”

The government had addressed weaknesses in the country’s legal framework, he said, through the enactment of amendments to laws on anti-money laundering and combating terrorism financing.

“When it comes to developing world-class expertise, legislative reform and strengthening state institutions to combat complex financial crime, we have come a long way. This is notwithstanding deliberate attempts to erode the state’s ability to detect, investigate and prosecute such crimes during the state capture era,” he said.

Ramaphosa said his administration had restored credibility to key institutions like Sars and the NPA to enable them to fulfil their mandates.

“We have bolstered the powers of the Special Investigating Unit (SIU) by establishing a Special Tribunal to recover public funds stolen through corruption and fraud, and an Investigative Directorate in the NPA to investigate serious corruption.”

He said finance minister Enoch Godongwana announced in the budget last week that the government would be channelling additional funds to the police, the NPA, SIU and Financial Intelligence Centre (FIC) to strengthen the fight against crime and corruption.

“One of our most effective tools for combating money laundering and other financial crimes is the multidisciplinary Fusion Centre we established in 2020. The Fusion Centre brings together bodies like the NPA, SIU, SARS, the Hawks, Crime Intelligence, State Security Agency and the FIC.

“Since its inception, the work of the Fusion Centre has led to the preservation and recovery of approximately R1.75bn in criminal assets.”

The government’s action plan to address the noted deficiencies was aligned with the work done to implement the recommendations of the state capture commission submitted to parliament in October last year, Ramaphosa added.

“As a country that values and enforces the rule of law, the greylisting is an opportunity for us to tighten our controls and improve our response to organised crime. This will ultimately place us on a stronger footing to effectively fight these damaging and dangerous crimes.”

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