The cost of greylisting by the Financial Action Task Force (FATF) is still with South Africa a year after it came off the list, and it may soon go up.
I had a taste of it recently. Revolut, Europe’s most valuable fintech firm, has formally applied for a banking licence in South Africa. Yet it will not allow locally based staff to hold administrative roles on the UK accounts of my company. Even with a UK-based manager approving every payment, finance staff in Joburg cannot prepare payments. Staff in Germany or Australia may do so. Plenty of multinationals with UK operations rely on admin teams in South Africa.
Revolut keeps South Africa on a “restricted” list of countries whose residents are barred from such roles. The list includes other countries that are or have been greylisted, such as Nigeria, Kenya, Namibia and Mozambique. South Africa, Nigeria and Mozambique came off the FATF greylist a year ago. All three are still on Revolut’s.
The cost of greylisting outlasts the listing. The FATF updates its list at each plenary. The private risk lists kept by compliance teams around the world are updated whenever someone gets around to it. I doubt Revolut’s risk team pays much attention to whether the FATF has changed a country’s status. Nor does it seem worried about how this looks in South Africa while it pursues a banking licence here. Multiply that inertia across correspondent banks, payment providers and clients, and you get counterparties who treat South African firms and residents with scepticism, often simply refusing to do business with them. It is a quiet drag on the country’s potential as a financial services outsourcing destination.
Worse, we may be back on the official list before the private lists catch up. The FATF has begun a new mutual evaluation of South Africa. Assessors are expected to visit early next year, and the outcome will be considered at the October 2027 plenary. If it goes badly, the country could be given a period to fix the deficiencies or face greylisting again.
The biggest driver of that risk is the Madlanga commission. The evidence presented there paints a picture of profound corruption in the police and other investigative services. International partners cannot reliably see such a force as being on top of the risk of criminals laundering money through the financial system.
As is so often the case, our laws are largely in place. The Financial Intelligence Centre exists and financial institutions are obliged to report suspicious activity. The National Treasury is working on updating legislation to keep pace with the FATF, which has been toughening up its methodology. But effectiveness, which the FATF is now much more concerned about, falls short because the laws are not properly policed. The evaluation will focus on whether investigations, prosecutions, convictions and asset recovery follow what the laws allow.
Concrete action
There is a way through this, but the timetable is tight. Madlanga’s final report is due to reach President Cyril Ramaphosa on November 16, and the assessors arrive within months. That is not enough time to rebuild the police, but it is enough time to show that the system can act.
The commission’s report is likely to recommend deep reforms to how our police and intelligence services work. Their leadership needs remaking. The balance of power between those who run the police and those with executive authority over them needs to change. Units such as the political killings task team should be established by legislation so that they cannot be dissolved on a political whim. Police procurement needs an overhaul. Investigative independence could go as far as making the Hawks a chapter 9 institution, free to police the police. But that would require a constitutional amendment, which would be difficult to get through at the best of times, never mind with the GNU. The president should publish the report promptly, with a credible implementation plan.
But the assessors will not be persuaded by a plan. They assess track records, and a wholesale restructuring announced weeks before they arrive is not likely to be convincing on effectiveness.
What will count is cases. The commission’s second interim report, published in May, already contained recommendations for further investigative and prosecutorial action, and some cases are already in train. By the time the assessors arrive, those matters should have led to convictions. With political will, laws can be amended rapidly, as South Africa showed in escaping the greylist. Prosecutions could also happen if the National Prosecuting Authority shows similar zeal.
If South Africa comes through this evaluation with a record of senior officials being charged, the frictions of the past three years will finally start to dissipate. Revolut will eventually update its list, and the country’s financial sector will be far more on the front foot in business with the rest of the world. That is the prize we must focus on.
Theobald is chair of research-led consulting firm Krutham
