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South Africa Advances in Addressing Anti-Money Laundering Compliance

South Africa Advances in Addressing Anti-Money Laundering Compliance

In a noteworthy development, South Africa has reportedly made substantial strides in rectifying technical compliance issues within its anti-money laundering system, as disclosed by the National Treasury. The Financial Action Task Force (FATF) recently re-evaluated 18 out of 20 deficiencies, upgrading 15 to no longer deficient, while five technical compliance deficiencies still persist.

On October 27, 2023, the FATF Plenary officially re-evaluated these deficiencies, acknowledging the progress made by South African authorities during the two-year period subsequent to the 2021 mutual evaluation (MER). Fifteen of the deficiencies were upgraded due to 14 recommendations achieving full or substantial compliance, and one recommendation being deemed not applicable to South Africa.

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As a result of these re-evaluations, South Africa is now considered fully or largely compliant in 35 of the 40 FATF Recommendations, including five of the six core FATF Recommendations. Nonetheless, five deficiencies in technical compliance persist, with three of them upgraded from non-compliant to partially compliant. Two deficiencies have remained partially compliant since 2021.

It is essential to note that the report does not delve into the effectiveness deficiencies outlined in the mutually agreed upon Action Plan, a critical component for South Africa to exit the FATF “grey list.”

To address these effectiveness deficiencies, imperative for South Africa’s removal from the FATF “grey list,” the government has taken proactive steps. This includes the establishment of the Interdepartmental Committee on Anti-Money Laundering and Combating of Terrorism Financing.

While the FATF acknowledged positive progress, it underscored the necessity for sustained efforts to tackle remaining actions and demonstrate their long-term viability. The emphasis on sustainability reflects the gravity of the situation, as merely achieving compliance is insufficient; the effectiveness of these measures is paramount.

The coming months will be crucial for South Africa as it continues to navigate the intricate landscape of anti-money laundering measures. The commitment to addressing both technical and effectiveness deficiencies will play a pivotal role in determining the nation’s standing in the global fight against illicit financial activities.

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