SA likely to be added to global money laundering, terrorist funding ‘greylist’

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South Africa is likely to be added to a global money laundering and terrorist funding ‘greylist’ which could jeopardise the integrity of the country’s banking system, its relationships with overseas banks and result in outflows of foreign investments.

South Africa has until the end of August to submit a report to the Financial Action Task Force (FATF) indicating its plan of action to address deficiencies flagged by the global money-laundering and terrorist financing watchdog.

Areas of concern include the local banks’ effectiveness in reporting suspicious transactions and the government’s ability to demonstrate improvement in the laws and work done by investigating authorities and courts to arrest corruption and money laundering.

An Economist at Old Mutual Johan Els says, “It looks like South Africa is on a path to be greylisted. That means there’ll be more costs involved in terms of participating in global transactions, costs for banks etc. But I do not think the impact will be as negative as many people assume, it doesn’t involve South Africa from being eliminated from international investment indices.”

“South Africa still stands out in terms of the strength of its economy and its institutions compared to other similar emerging markets. The policy environment, the regulating environment, all of that will help South Africa,” adds Els.

Critical weaknesses in the systems put South Africa at risk: