GREY LISTING UPDATE: FINANCIAL ACTION TASK FORCE REPORT POINTS TO SLOW PROGRESS IN ADDRESSING CONCERNS

GREY LISTING UPDATE: FINANCIAL ACTION TASK FORCE REPORT POINTS TO SLOW PROGRESS IN ADDRESSING CONCERNS

• 30 October 2023
• Safety and Security
• SA Legal Academy

The Paris-based Financial Action Task Force (FATF) has issued a statement on jurisdictions under increased monitoring, including South Africa.

Linked to a communication published on the Financial Intelligence Centre (FIC) website, the statement acknowledges the ‘high-level political commitment’ made by the South African authorities in February 2023 to ‘work with’ the FATF and the Eastern & Southern Africa Anti-Money Laundering Group in efforts to ‘strengthen the effectiveness’ of its anti-money laundering and counter-terrorist financing regime.

Noting measures already taken to address ‘technical deficiencies’ in a financial sanction regime intended to curb proliferation financing, the statement nevertheless draws attention to the fundamental importance of:

• ‘an effective mechanism’ for identifying and targeting individuals and entities likely to meet the criteria concerned, and
• the ‘effective implementation’ of targeted financial sanctions.

In the FATF’s view, South Africa should also continue working on ‘implementing its action plan to address … strategic deficiencies’.

Against that backdrop, according to the FATF – and in line with South Africa’s risk profile – key areas on which the authorities should focus include ‘demonstrating a sustained increase’ in:

• outbound mutual legal assistance requests to help facilitate investigations and asset confiscation
• investigations into and prosecution for ‘serious and complex money laundering’, as well as ‘the full range of terrorist financing activities’, and
• efforts to identify, seize and confiscate the ‘proceeds and instrumentalities of a wider range of predicate crimes’.

Other priorities reflected in the statement point to:

• the need for more requests from law enforcement agencies to the FIC for investigation-related financial intelligence
• gaps in the ‘risk-based supervision of designated non-financial businesses and professions’
• a possible reluctance among supervisors to apply ‘proportionate and effective sanctions for non-compliance’
• delays in providing the authorities with ‘timely access to accurate, up-to-date beneficial ownership information on legal persons and arrangements’, and
• a possible reluctance to apply sanctions for breaches in or the violation of beneficial ownership obligations.

More generally, South Africa’s terrorist financing risk assessment framework requires updating if it is to properly inform the effective implementation of ‘a comprehensive national counter-financing of terrorism strategy’.

A comparison between these requirements and deficiencies prompting the FATF to grey list South Africa in February 2023 tend to suggest that little significant progress has been made.

• FATF statement
• FIC communication
• February 2023 National Treasury media statement reflecting reasons for FATF’s decision to grey list South Africa

Published by SA Legal Academy Policy Watch

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