Johannesburg — South Africa faces a significant risk of returning to the Financial Action Task Force (FATF) grey list barely a year after securing its removal, as progress on anti-corruption reforms remains stalled, according to the latest quarterly assessment by business lobby group Business Leadership South Africa (BLSA).
The FATF grey list identifies jurisdictions under increased monitoring for shortcomings in combating money laundering and terrorist financing. A return to the list could increase scrutiny of South African financial transactions, raise compliance costs for banks and businesses, and potentially prompt some international banks to reduce correspondent banking relationships.
Such a development could make cross-border payments and trade financing slower and more expensive, with possible implications for international investment and business confidence.
South Africa spent more than two years on the grey list before being removed in October 2025. At the time, business groups warned that the listing had discouraged foreign investment.
Anti-Corruption Reforms Remain Stalled
The BLSA Reform Tracker recorded no improvement in South Africa’s corruption reform score, which remained at 51.2 during the July–September quarter. No deliverables advanced in the anti-corruption category.
The score indicates that anti-corruption reforms remain, on average, around the halfway mark, significantly below the country’s overall reform score of 72.5.
“There is significant risk,” Stuart Theobald, executive chairman of research consultancy Krutham, which compiles and analyses the tracker, said during a media briefing.
Ismail Momoniat, a National Treasury adviser who led South Africa’s campaign to exit the grey list in October 2025, has also highlighted anti-corruption as a major vulnerability, according to the tracker.
South Africa is undergoing a new FATF mutual evaluation, with a peer review expected in the first quarter of 2027. The assessment process is scheduled to continue through October 2027.
The review will examine whether the country has sustained improvements in investigations and prosecutions targeting money-laundering networks — measures that helped secure its removal from the list.
Law Enforcement Weaknesses Under Scrutiny
BLSA warned that shortcomings in law enforcement, particularly in investigating organised crime, securing successful prosecutions and recovering criminal assets, could undermine South Africa’s efforts to remain off the grey list.
Concerns have also intensified following revelations from the state-appointed Madlanga inquiry into alleged corruption and interference in law enforcement. The inquiry has highlighted reported leadership failures within the police and intelligence services.
BLSA Chief Executive Officer Busi Mavuso warned that unresolved weaknesses in criminal justice institutions could jeopardise the country’s progress.
South Africa's National Treasury, which has led anti-corruption initiatives, did not immediately respond to a request for comment.
Broader Reform Progress Offers Some Encouragement
Despite the warning over anti-corruption efforts, South Africa’s broader reform programme recorded its highest score since tracking began in March 2024.
The overall reform completion index increased to 72.5 in the July–September quarter, up from 71.3 in the previous quarter.
However, the divergence between the overall reform score and the stagnant anti-corruption rating highlights a key challenge: progress in wider economic and institutional reforms may not be sufficient to address weaknesses in financial crime enforcement.
South Africa's ability to demonstrate sustained improvements in investigations, prosecutions and asset recovery will be important as it approaches the next FATF evaluation.
Source: Reuters
Reporting: Colleen Goko
Editing: Anathi Madubela.
