South Africa makes further progress in strengthening measures for FATF compliance

The Financial Action Task Force (FATF) issued South Africa’s Third Enhanced Follow-Up Report and Technical Compliance Re-Rating in respect of its measures to tackle money laundering and terrorist financing on 5 November.

Based on its technical compliance result in the mutual evaluation report (MER), South Africa was placed in enhanced follow-up in June 2021 because it was rated non-compliant with five FATF Recommendations and partially compliant (PC) with 15 FATF Recommendations.

The FATF expects that countries will have addressed most, if not all, technical compliance deficiencies by the end of the third year from the adoption of their MER.

The Third Enhanced Follow-Up Report summarises South Africa’s progress to improve its technical compliance by addressing some of the technical compliance deficiencies identified in the MER. It does not address what progress South Africa has made to improve its effectiveness.

Since the 2021 assessment of South Africa’s and the 2023 Follow-Up report, the FATF said the country had taken a number of actions to strengthen its framework. Overall, it said, South Africa had made progress in addressing most of the technical compliance deficiencies identified in its MER and has been upgraded as follows:

• Recommendation 2 (National cooperation and coordination) re-rated from partially compliant to largely compliant.
• Recommendation 6 (Targeted financial sanctions related to terrorism and terrorist Financing) re-rated from partially compliant to largely compliant.
• Recommendation 15 (New technologies) re-rated from partially compliant to largely compliant.

As a result, South Africa is now rated as compliant on five Recommendations and largely compliant on 32. However, the FATF said it had still not made sufficient progress on Recommendation 8 (Non-profit organisations) and Recommendation 32 (Cash couriers), which remain rated ‘partially compliant’.

“The fact that South Africa complies with 37 of 39 applicable Recommendations places it in a good position for the next 2026/27 Mutual Evaluation assessment,” said the National Treasury Department of South Africa. “Further legislation will be introduced next year to strengthen Recommendation 8 and improve the extent of compliance for other Recommendations.”

South Africa will next report back on remaining deficiencies in its fifth-round mutual evaluation. The National Treasury said that while South Africa is working hard to address all outstanding action items by February 2025, this remains a difficult challenge.