The logo of the FATF (the Financial Action Task Force) is seen during a news conference after a plenary session at the OECD Headquarters in Paris.
By Feroza Petersen
On February 24, 2023, the anti-money laundering global watchdog Financial Action Task Force (FATF) delivered a significant blow to South Africa's financial standing by placing the country on its grey list and thus leaving the country grappling with the consequences of its financial non-compliance.
In an interview with radio and television news anchor Thembekile Mrototo of Newzroom Afrika, Khaya Sithole, accountant and activist, voiced his opinion on the implications of the greylisting on South Africa.
“South Africa's inclusion on the FATF grey list is a stark reminder of the pressing need for enhanced financial transparency and compliance within our nation," said Sithole when asked to explain what the greylisting means for South Africans.
"When dealing with South Africa, be aware that finances related to some specific transactions may have taken illicit routes," Sithole warned, highlighting the complexity of financial dealings with the nation and the need for heightened diligence.
He outlined the challenges, cautioning that counter-party compliance in the country involves navigating a distinctive process.
Sithole further expressed concerns about the country's standing in international financial systems. He emphasised the need for a robust system capable of monitoring and regulating transactions comprehensively, underlining the broader implications of South Africa's exclusion from global financial systems.
During the interview, Sithole referenced the previous year's warning to financial institutions, advising South Africa to strengthen prosecutions and asset freezing to demonstrate financial compliance. Sithole's observation emphasised the urgency for South Africa to address transparency challenges and meet international standards.
The interview highlighted a complex landscape where financial transparency, legal structures, and global integration intersect.
“The main challenge, unfortunately, for institutions or individuals who are not South African but wish to transact and engage in transactions with foreign counterparts, is that South Africans struggle to explain where the cash originates from, there is a lack of clarity as to the structures that make up particular corporates, and people have difficulty in finding our where the money made, is going to. When dealing with this country, please be aware that all may not be above board.
“The financial ecosystem of the country must have the right rules and regulations – people must be able to tell you where the money comes from and who the source is,” cautioned Sithole.
As the FATF grey-lists South Africa, the nation finds itself at a critical juncture, grappling with the consequences of its financial non-compliance.
The international community keenly watches as South Africa faces the challenges of aligning with global standards to regain its financial credibility.
* Feroza Petersen is a freelance contributor.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.