The longer that South Africa is under increased monitoring, the worse it will be for the country’s economy
When South Africa was greylisted by the Financial Action Task Force (FATF) in February 2023, media coverage focused on rising borrowing costs and the rush to pass anti-money-laundering (AML) laws. Government officials struck an optimistic tone, citing progress on 20 of the 22 FATF recommendations and suggesting that delisting would follow in 2025.
But greylisting is not just about ticking boxes. It is a reputational verdict and the verdict from the market has been clear. Since the listing, South Africa has seen capital flight, higher-risk premiums and a chilling effect on international banking relationships. According to the South African Reserve Bank, sovereign borrowing costs have risen by 30 to 40 basis points. That means less fiscal space for service delivery and development.
The reputational damage is growing. In early 2025, US President Donald Trump publicly stated that a future administration might cut aid to South Africa, citing “chronic financial opacity” and ongoing land expropriation issues. While politically charged, the remarks had economic consequences. Risk analysts and institutional investors took note — a global political figure had voiced distrust in South Africa’s financial governance and the cost of capital rose again.
Greylisting is not the root cause, it is a symptom. The deeper illness is institutional dysfunction and South Africa’s enforcement regime for financial crime is falling apart at the seams.
From 2020 to 2023, the Financial Intelligence Centre received more than 7.5 million suspicious transaction reports (STRs). Fewer than 300 reportedly led to formal investigations or prosecutions. The National Prosecuting Authority lacks a dedicated AML division. Agencies such as the intelligence centre, prosecuting authority, the South African Revenue Service and the Companies and Intellectual Property Commission operate in silos, with no shared systems or real-time coordination. Critical leads are lost in jurisdictional grey areas.
Even where structures exist, such as the beneficial ownership register, they often lack teeth. The registry depends on self-reported data, is disconnected from other systems and is only as reliable as what people voluntarily disclose. There is no independent verification and no sanction for non-compliance.
South Africa also lacks a centralised financial sanctions enforcement authority. There is no body equivalent to the United Kingdom’s Office of Financial Sanctions Implementation, nor has the country adopted a public-private intelligence-sharing model like the UK’s Joint Money Laundering Intelligence Taskforce. Instead, engagement between regulators and banks is ad hoc and enforcement remains fragmented.
In response, the private sector has started acting alone. Major South African banks have closed accounts they deem high-risk, including those of crypto firms, trust providers and politically exposed clients. These are not government-led clean-ups. They are market-driven moves to avoid reputational contagion from global correspondent banks. That kind of pre-emptive action is not a sign of institutional strength, it signals regulatory abdication. When enforcement is outsourced to private actors, it corrodes public trust and weakens the rule of law.
And the damage isn’t limited to greylisting. Multilateral development banks increasingly tie FATF performance to funding decisions. The International Monetary Fund flags AML enforcement failures in Article IV consultations. Economic, social and governance investors include AML oversight in governance scores. A weak FATF record lowers South Africa’s sustainability ratings, limits concessional finance, and shuts doors to green funding, all at a time when public infrastructure and social support desperately need capital.
Despite all this, corporate boards in South Africa remain largely absent from the conversation. In the UK, directors must personally certify their firm’s AML framework under the Senior Managers and Certification Regime. In South Africa, no such duty exists. While the Companies Act, the Financial Intelligence Centre Act and the Prevention of Organised Crime Act might create theoretical liability, AML oversight is still relegated to compliance teams, not the boardroom.
This silence is no longer defensible. Financial crime governance is a boardroom issue, and the legal and financial consequences of inaction are growing sharper. Governance failure doesn’t just mean regulatory penalties, it means reputational damage, financing constraints and impaired shareholder value. At the national level, it means less money for roads, hospitals and electricity infrastructure.
To restore credibility and protect access to development capital, South Africa urgently needs:
- A centralised financial sanctions authority with real enforcement powers;
- A verified, accessible beneficial ownership registry;
- A specialised AML prosecution unit with protected budget and autonomy;
- Mandatory AML disclosures at board level and
- A national coordination task force using shared digital case management and enforcement analytics.
We also need feedback loops. Our regulators publish no anonymised case studies, conduct no post-enforcement reviews and engage minimally with industry to evolve policy. Without institutional memory, we cannot adapt and, without adaptation, we will fail.
If South Africa is delisted by FATF in 2025, it will be a political victory. But the market is asking a different question: ‘Does South Africa have the institutional muscle to make enforcement real or is this another round of legislative cosmetics?’
Greylisting was the warning shot. The real test is resilience. If we fail that, we won’t need FATF to blacklist us, the market will do it for them.
This article is adapted from academic research. It has been revised and shortened for accessibility and public readership.
Annerize Shaw (Kolbé) is a specialised attorney of the High Court of South Africa, an LL.M. candidate in corporate and commercial law at the University of London, and a member of the Institute of Advanced Legal Studies, London. She is a published author in the field of international comparative law, with a focus on corporate compliance and legal sector transformation.