South Africa has made a lot of progress to improve its technical compliance and deficiencies in its legal framework to avoid being greylisted at the Financial Action Task Force’s (FATF) meeting next week.
This was the view of PwC South Africa ahead of the global inter-governmental body’s decision, which will be taken at a summit during the week of February 20-24. The FATF decision depends on whether it believes local authorities have done enough to shore up the country’s ability to prevent money laundering, terrorist financing, and the proliferation of financing of weapons of mass destruction.
Kerin Wood, PwC South Africa Risk and Response leader, commended local authorities for their efforts around regulatory reform to stave off a potential greylisting.
“The speed at which they have facilitated this is noteworthy. The hope is that the efforts to date and the speed of implementation have been sufficient to demonstrate to the FATF the seriousness with which the country takes our obligations around the prevention of money laundering and terrorist financing,” Wood said.
“Regardless of the outcome next week, one thing remains clear: South Africa cannot afford to be complacent and must continue in its efforts to demonstrate the effectiveness of its enhanced legal framework through enforcement,” she said.
In PwC South Africa’s view, a lot of progress has been made to address technical compliance, including:
- Fast-tracking legislative reforms to increase the breadth and depth of its regulatory frameworks. These efforts have included the enactment of the General Laws (Anti-Money Laundering and Counter-Terrorist Financing) Amendment Act 22 of 2022 on December 31, 2022. The amendment gives effect to various pieces of legislation to address technical deficiencies highlighted in the FATF’s evaluations. These include enhanced procedures and powers for regulatory authorities and improved access to information in relation to ultimate beneficial owners.
- Widening the scope of application of regulatory requirements around anti-money laundering through amendments to Fica, making new entities subject to the Act. This included bringing higher-risk entities like virtual asset service providers and money transfer providers into the scope of Accountable Institutions under the Act.
- Regulatory bodies such as the Prudential Authority and Financial Service Conduct Authority working alongside banks and non-bank financial institutions to enhance the application of the FATF’s risk-based methodologies to confront areas of concern.
These amendments have also been supplemented by the Protection of Constitutional Democracy against Terrorist and Related Activities Amendment Bill of 2022 which addresses shortcomings linked to terrorist financing.
Wood added that going forward, authorities should also focus on heightened levels of risk-based supervision by regulators, the prioritisation of law enforcement initiatives, ensuring investigations are effectively supported by having sufficiently capacitated and skilled staff, and the provision of mutual cooperation and legal assistance regarding criminal matters between countries.
