After nearly two years of institutional repair, South Africa may soon be removed from the Financial Action Task Force (FATF) grey list. The listing, issued in February 2023, flagged serious deficiencies in the country’s anti-money laundering and counter-terrorism financing systems.
While government efforts have brought the country closer to compliance, experts caution that this milestone, though important, does not mean the underlying issues are resolved.
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Economic Pressure and Symbolic Victory
South Africa’s possible removal from the grey list by October 2024 is expected to restore a degree of confidence among international investors and businesses. The grey listing, largely seen as a legacy of the state capture era, damaged South Africa’s credibility and slowed investment momentum.
According to political analyst and economist Dr Dale McKinley, “Everything is in place for South Africa to be taken off the grey list by October.” He explains that the past two years have focused on strengthening financial oversight and law enforcement bodies.
Key institutions such as the National Prosecuting Authority, the Hawks, and the Financial Intelligence Centre have seen internal changes. Recruitment drives and restructuring efforts have aimed to improve capacity and restore public trust.
However, McKinley warns that these reforms are not yet complete. “A prosecutorial case is only as good as the investigation itself,” he says. Without strong investigative work, many cases collapse in court before they deliver justice.
The grey listing’s effects have been felt most acutely by small and medium enterprises. These businesses rely heavily on seamless international financial transactions, but banks became cautious, increasing paperwork and delaying approvals.
“Quite a lot of the small and medium-scale enterprises rely on international financial transactions to keep their businesses afloat,” says McKinley. Removal from the list could ease these restrictions, allowing smoother trade and better credit access.
Despite the optimism, McKinley highlights that many other African countries, such as Nigeria, also face FATF pressure. South Africa was not alone in its shortcomings. “Many others have begun addressing similar kinds of gaps,” he adds.
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Beyond the List, Deeper Problems Remain
While the removal from the FATF list would indicate international approval, it does not fix domestic dysfunction. “To think that being taken off the grey list means we have dealt with the legacies of state capture is premature,” says McKinley. Much of the rot that weakened institutions still exists at local, provincial, and even national levels.
Failures in municipal governance continue to affect daily life. “The water crisis in Johannesburg is an absolute mess,” he notes. He attributes this to local-level capture, where criminal syndicates and politically connected individuals continue to influence public contracts and decision-making. “You can tick the international boxes, but if institutions are not functioning properly, we are still going to run into problems.”
Although legal reforms are underway, their success depends on enforcement. McKinley points out that symbolic victories are not enough to restore credibility. “Even if someone is convicted, do they actually pay the price fully, and is that a deterrent for future wrongdoing?” he asks.
Much of the FATF’s concern goes beyond laws on paper. It focuses on whether those laws are being used effectively. McKinley explains that enforcement requires collaboration between prosecutorial bodies and investigating units. “It is not just the NPA. It is the Hawks, the Special Investigating Unit, the Directorate for Priority Crime Investigation, the Financial Task Team. A range of different institutions are supposed to work together.”
While progress has been made, many challenges remain. Shamila Batohi, head of the NPA, has been criticised for the lack of high-profile convictions. McKinley defends the institution’s efforts. “What you do not see is what has been happening behind the scenes over the last two years,” he says. Internal clean-ups and improved coordination have contributed to FATF’s recognition of progress, but there is still a long road ahead.
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Regional Outlook and Long-Term Recovery
South Africa’s progress must be seen within a wider African context. As a major economy on the continent, South Africa plays a crucial role in shaping investor sentiment across Africa. “This is a positive thing. It should have happened quite some time ago,” says McKinley. He adds that while this development is encouraging, it is only one part of addressing the long-term damage caused by years of mismanagement and corruption.
The ultimate goal is not just to comply with international standards but to build systems that work for ordinary South Africans. Until institutions at every level can operate transparently, deliver justice, and prevent corruption, symbolic achievements will remain fragile.
South Africa is on the verge of an important milestone. But it is not a finish line. It is a checkpoint in a much longer journey to rebuild trust, strengthen institutions, and restore both national and international confidence.
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