FATF status

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

Latest FATF Statement - 25 October 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 demonstrating a sustained increase in outbound MLA requests, strengthening its AML/CFT supervisory capacity by improving the risk-based supervision of DNFBPs, enhancing its identification, seizure and confiscation of proceeds and instrumentalities of a wider range of predicate crimes, in line with its risk profile, updating and implementing its TF strategy and increasing relevant authorities’ TF capabilities on the basis of an understanding of its TF risks, as well as ensuring the effective implementation of targeted financial sanctions. South Africa should continue to work on implementing its action plan to address its remaining strategic deficiencies, including by: (1) demonstrating that all AML/CFT supervisors apply effective, proportionate, and effective sanctions for non-compliance; (2) 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 beneficial ownership obligations; (3) 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. 

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 2024. According to that Evaluation, South Africa was deemed Compliant for 5 and Largely Compliant for 32 of the FATF 40 Recommendations. It remains Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness & Technical Compliance ratings.

South Africa has a strong anti-corruption framework, yet enforcement is weak, leading to low public sector accountability and risks for whistleblowers. Corruption, particularly in public procurement, is seen as a significant barrier to investment, with systemic issues highlighted during former President Jacob Zuma's administration. Recent initiatives, including judicial commissions and the establishment of the Office on Counter Corruption and Security Services, aim to address these challenges, although the inconsistent application of laws like the Prevention and Combating of Corrupt Activities Act remains a concern.

South Africa has the most advanced and broad-based economy in sub-Saharan Africa, characterized by stable institutions and a well-regulated financial sector. However, it faces significant challenges, including a prolonged period of stagnation, corruption, energy crises, and high unemployment rates, which hinder its economic growth and investment climate.

South Africa's investment climate is bolstered by its advanced financial markets and stable institutions, making it an attractive hub for regional investment, particularly for U.S. investors. However, challenges such as corruption, energy crises, and policy uncertainty hinder its investment potential, leading to a sub-investment grade credit rating from major agencies. The government actively promotes foreign investment but faces criticism regarding the implementation of local empowerment policies and regulatory complexities.