Reserve Bank Governor Lesetja Kganyago has cautioned that the threat of the country possibly being grey listed, should be taken very seriously.
He presented the South African Reserve Bank’s annual report to Parliament’s Standing Committee on Finance.
Authorities have warned that South Africa’s anti-money laundering legislative framework is lagging behind when compared with international standards.
The Financial Action Task Force has given South Africa until October to fix shortfalls it had identified in how the country combats money laundering and the financing of terrorism.
Kganyago says should the grey listing happen, it will be another blow to the economy.
“The implications for the economy are massive, the cost to borrow in this economy will go higher. As highlighted, the country risk premium has gone up. I can’t say it is because of that but we think the market is factoring it in. And when it happens those who didn’t think it would happen will also increase their premium they ask of SA. “
The Financial Intelligence Centre has cautioned that South African small businesses are also at a risk of money laundering: