Foreign Investment – After nearly two years under the Financial Action Task Force (FATF) greylist, South Africa is on the verge of a financial breakthrough. By August 2025, the country is expected to be removed from the FATF greylist – a classification that has, since February 2023, signaled South Africa as a high-risk jurisdiction for money laundering and terror financing. This removal is seen as a pivotal turning point that could significantly restore investor confidence, enhance the global image of South Africa’s financial systems, and inject billions into its economy. The greylisting was a result of weaknesses identified in South Africa’s anti-money laundering and counter-terrorism financing frameworks. Since then, the South African government, led by the National Treasury and the Financial Intelligence Centre (FIC), has been working relentlessly to implement recommended reforms. Over 22 action items were addressed, spanning legislative improvements, regulatory enforcement, and stronger institutional capacity. This expected exit from the greylist could result in a surge of up to 22% in foreign direct investment (FDI), according to economists. Global investors, particularly in the banking, mining, and manufacturing sectors, had previously adopted a cautious stance due to compliance and reputational concerns. With renewed confidence in South Africa’s regulatory strength, these sectors are poised for revitalization. Let’s explore what this means for the country, the economy, and ordinary citizens.
What is the FATF Greylist and Why Was South Africa Added?
The FATF greylist identifies countries with strategic deficiencies in their financial systems. South Africa was greylisted in February 2023 after multiple global reviews found the country’s frameworks vulnerable to illicit flows and terrorism financing.
- FATF = Financial Action Task Force
- Greylist = List of countries under increased monitoring
- Date Added: February 24, 2023
- Primary Concerns: Weak AML/CFT frameworks
- Lead Institutions Involved: National Treasury, Financial Intelligence Centre (FIC)
- Number of Action Items: 22
- Deadline for Improvements: June 2024
- Final FATF Review: Scheduled for July 2025
Foreign Investment – FATF’s 22 Action Items for South Africa
To exit the greylist, South Africa had to complete a checklist of actions:
- Amend legislation related to AML (Anti-Money Laundering) and CFT (Counter Financing of Terrorism)
- Improve beneficial ownership transparency
- Enhance oversight of designated non-financial businesses and professions (DNFBPs)
- Prosecute money laundering and terror financing cases
- Increase information sharing across agencies
- Improve border and customs monitoring
- Provide FATF with real-time case studies and data
- Increase inspections of high-risk sectors
- Train police, prosecutors, and compliance officers
- Strengthen the Financial Intelligence Centre’s data analytics
Foreign Investment – Economic Benefits of Greylist Exit for South Africa
A removal from the greylist is likely to have far-reaching effects on investment, credit rating, and sectoral growth.
- FDI Increase Projection: Up to 22% jump post-exit
- Improved global credit rating outlook from Moody’s, S&P
- Return of previously hesitant institutional investors
- Lower borrowing costs for banks and businesses
- More stable rand, especially against USD and Euro
- Strengthened perception of banking sector safety
- Higher trade compliance, boosting exports
- Increased foreign portfolio flows into JSE-listed companies
Projected Investment Growth by Sector Post-Greylist Exit
| Sector | Current Annual FDI | Projected Growth | Potential Post-Exit FDI |
|---|---|---|---|
| Mining & Resources | R76 Billion | +18% | R89.68 Billion |
| Banking & Insurance | R59 Billion | +25% | R73.75 Billion |
| Manufacturing | R41 Billion | +22% | R50.02 Billion |
| Renewable Energy | R29 Billion | +28% | R37.12 Billion |
| ICT & Telecom | R20 Billion | +20% | R24 Billion |
| Real Estate | R17 Billion | +19% | R20.23 Billion |
| Tourism & Hospitality | R11 Billion | +23% | R13.53 Billion |
Reforms Implemented by South African Government
To meet the FATF’s conditions, South Africa overhauled multiple laws and institutional practices. These reforms not only addressed FATF concerns but also improved internal governance.
- General Laws Amendment Act passed in December 2022
- Companies Act modified to ensure beneficial ownership registry
- Amendments to FIC Act to increase reporting obligations
- National Risk Assessment published with sector-specific risk profiles
- New inter-agency coordination body created under National Treasury
- Real-time suspicious transaction reporting system launched
- Sector-wide workshops conducted to educate businesses on AML/CFT compliance
Agencies Involved in Reform and Oversight
| Department/Agency | Role in FATF Compliance |
|---|---|
| National Treasury | Lead policymaker and coordinator |
| Financial Intelligence Centre (FIC) | Data analysis, enforcement & inspections |
| South African Reserve Bank (SARB) | Banking regulation & foreign exchange audits |
| South African Police Service (SAPS) | Law enforcement, prosecution coordination |
| Hawks (DPCI) | Investigations into money laundering |
| Department of Trade, Industry & Competition | Oversight on business registrations |
| Department of Justice | Judicial framework and legal amendments |
| FSCA (Financial Sector Conduct Authority) | Supervision of financial entities |
Impact on Ordinary South Africans
While greylisting may seem like a technical issue, its effects trickled down to everyday citizens in many ways. Conversely, exiting the list brings real benefits for consumers and workers alike.
- Banks may lower international transaction fees
- Stronger rand value can reduce fuel and import costs
- Increased job creation as FDI returns
- Property market to benefit from new investors
- Improved credit score environment for local borrowers
- Expansion of fintech and cross-border startups
- More transparent business environment
- Boost in retirement fund stability due to stronger equities
Short-Term Benefits South Africans Can Expect
| Area | Greylist Impact | Expected Post-Exit Outcome |
|---|---|---|
| International Payments | Delays, Higher scrutiny | Faster, lower-cost transactions |
| Credit Ratings | Pressured | Upgrades, positive outlook |
| Inflation | Slightly elevated | Cooling effect as rand stabilizes |
| Employment | Weak job creation | Surge in investment-linked hiring |
| Fuel and Imports | Costly due to weaker rand | Slight price reductions possible |
| Business Loans | Stringent due to risk | Easier access, more approvals |
| Small Enterprises | Limited capital inflow | Better investor access |
What Happens If South Africa Doesn’t Exit?
Failure to exit would prolong financial constraints and could tarnish South Africa’s reform credibility. The risks include:
- Credit rating downgrades
- Decreased global capital inflows
- Loss of business to neighboring jurisdictions
- Higher cost of compliance for local firms
- Potential IMF or World Bank scrutiny
- Market pressure on the rand and interest rates
- Job losses due to lower economic momentum
Last Three Countries Removed from FATF Greylist
| Country | Date Greylisted | Exit Date | Time on Greylist | Investment Impact Post-Exit |
|---|---|---|---|---|
| Mauritius | Feb 2020 | Oct 2021 | 20 Months | FDI rose by 28% |
| Botswana | Oct 2018 | Oct 2021 | 36 Months | 19% GDP growth in 2 years |
| Cambodia | Feb 2020 | Oct 2023 | 44 Months | Major rebound in tourism |
Departmental Contact for Greylisting and Compliance Support
For inquiries related to greylist reforms, compliance responsibilities, or investor-related queries, contact the following:
National Treasury (Greylist Compliance Unit)
Email: [email protected]
Phone: +27 12 315 5111
Website: www.treasury.gov.za
Financial Intelligence Centre (FIC)
Email: [email protected]
Phone: +27 12 641 6000
Website: www.fic.gov.za
South African Reserve Bank (International Compliance Desk)
Email: [email protected]
Phone: +27 12 313 3911
Website: www.resbank.co.za
Department of Trade, Industry and Competition (Business Compliance Office)
Email: [email protected]
Phone: +27 12 394 9500
Website: www.thedtic.gov.za
Financial Sector Conduct Authority (FSCA)
Email: [email protected]
Phone: +27 12 428 8000
Website: www.fsca.co.za
South Africa’s anticipated exit from the FATF greylist in August 2025 represents more than just a policy milestone—it could be the spark the economy desperately needs. The combination of renewed investor confidence, regulatory reform, and global engagement might just shift the tide in South Africa’s favor. While vigilance will remain important, the progress made so far is nothing short of remarkable.
FAQs of Foreign Investment
Q1: What is FATF Greylisting?
A: It is when a country is placed under increased monitoring by FATF due to flaws in anti-money laundering and terrorism financing controls.
Q2: When was South Africa greylisted?
A: On February 24, 2023, during an FATF plenary session.
Q3: What reforms were made to exit the greylist?
A: South Africa amended key legislation, improved oversight, empowered financial regulators, and increased inter-agency coordination.
Q4: How does greylisting affect ordinary people?
A: It impacts banking fees, loan access, job creation, inflation, and the value of the rand.
Q5: Will South Africa definitely exit in August?
A: While not guaranteed, most indicators suggest a strong probability of exit after the July FATF review and completion of all action items.