What South Africa’s FATF greylist exit teaches us about effective reform

As we all hoped for, South Africa exited the FATF greylist in just 32 months by addressing all 22 action items with clear accountability, sustained collaboration between government and business and genuine operational improvements.

Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), says six principles made the difference: clear measurable targets, proper accountability, transparent reporting, collaboration over conflict, sustained political commitment and fixing operations, not just policies.

She points out that the greylisting by the Financial Action Task Team (FATF) was the result of state capture’s deliberate destruction of crime-fighting institutions. “We had to show that we can rebuild what was broken when we confront problems honestly. This success proves South Africa can deliver world-class results, and we must now apply these same principles to energy, logistics, water and other critical reforms.”

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Exiting greylist cause for celebration and shows critical lessons about reform

Mavuso says exiting the greylist is cause for genuine celebration, but it is even more important that it offers critical lessons about what works when we get serious about reform.

“In 2022, when greylisting was a serious risk already, BLSA commissioned research showing the economic impact could range from under 1% of gross domestic product (GDP) if we reacted fast and credibly, to 3% of GDP if we were slow and unwilling to meet FATF standards.

“We warned that the reputational damage would be significant, including enhanced due diligence requirements for all transactions between South Africans and the rest of the world, potential loss of foreign banking relationships and reduced appetite for investment.”

Mavuso says the good news is that we managed to keep the impact to the bottom end of that estimate, thanks to our determined and credible effort.

“This is no small feat, particularly given that several of these items required demonstrating sustained improvements over multiple reporting periods and genuine effectiveness, not just rules being changed but actually enforced.

“The FATF greylist exit demonstrates something we often forget in South Africa: when we combine political will, technical competence and sustained focus, we can deliver world-class results.”

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Factors that were critical to get SA off the FATF greylist

She points out that these factors were critical to successfully get South Africa off the greylist:

• Firstly, there was clear accountability. National Treasury chaired an interdepartmental committee that coordinated the process, reported regularly to Cabinet and maintained laser focus on the action plan. The FATF is a peer-based mechanism, so we knew who was going to judge us and how we needed to satisfy their requirements. There is a clear game plan because other countries are affected if South Africa’s institutions are captured by money launderers and terrorist financiers.
• Secondly, there was collaboration between government and business. Banks and other accountable institutions worked closely with the committee, allocating resources to support the training of criminal investigators and other interventions. BLSA entered into a memorandum of understanding with the National Prosecuting Authority to provide private sector investigation and analysis skills. Through the Business Against Crime initiative, we channelled resources and expertise to support the criminal justice system. Overall, these collaborations helped improve state capacity.
• Thirdly, there was a sustained effort by law enforcement. The Directorate for Priority Crime Investigation (Hawks), State Security Agency and NPA demonstrated sustained increases in investigations and prosecutions of serious and complex money laundering and terror financing. This was the hardest part of the action plan, requiring not just policy changes but operational transformation.
• Fourthly, the technical excellence of regulators made a difference. The Financial Intelligence Centre (FIC), South African Reserve Bank (Sarb), Financial Sector Conduct Authority (FSCA), Companies and Intellectual Property Commission (CIPC) and other agencies upgraded their systems, applied effective sanctions and ensured timely access to beneficial ownership information. The technical work was demanding, but they delivered.
• Fifthly, there was transparency and regular reporting. The authorities provided regular updates, showing progress against each action item. This transparency built confidence both domestically and with FATF that we were serious about compliance.

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SA must be honest about why we were on greylist to start with

Mavuso says we must be honest about why we found ourselves on the greylist in the first place. “Greylisting was a consequence of the state capture era, which saw the deliberate undermining of commercial crime investigations and prosecution institutions. The FATF’s concerns were one element of the price we paid for that destruction.

“The fact that we have now rebuilt these capabilities, and in some cases built them even further than before, is a testament to the quality of leadership in key institutions. But it also shows what happens when we confront the consequences of state capture head-on rather than pretending they do not exist.”

She says South Africa needed stringent anti-money laundering rules and supervision anyway, and the FATF process provided impetus to get our commercial crime-fighting system up to scratch. These reforms strengthen our financial system, improve business confidence and contribute to the integrity of South Africa’s economy.

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SA must now apply lessons from FATF greylisting elsewhere

However, Mavuso says, we must now apply the lessons elsewhere. “The FATF exit offers a template for how we should approach other critical reforms. We must have clear, measurable targets, no moving goalposts, and the test of success must be about effectiveness. There must be proper accountability and transparent reporting on progress. Regular updates maintain pressure and build confidence. Sunlight is the best disinfectant – and the best motivator.”

She also encourages collaboration between partners with common interests. “In the FATF example, government welcomed business support rather than viewing it as interference. Partnership accelerates delivery. There also has to be sustained political commitment. Multiple FATF assessments confirmed that South Africa’s political leadership remained committed to implementation. This consistency mattered enormously.”

Finally, she says, it is not just about fixing policies but about fixing operations. “The action items required demonstrating sustained operational improvements, not just passing new laws. We delivered on implementation, not just plans.

“The international community has taken note of what we achieved. Large foreign investors still see us as the strongest economy in Africa. Our financial system is trusted to handle foreign investor exposures. Last week’s announcement strengthens that foundation.

“But reputation is built on consistent delivery. The FATF exit must be followed by continued progress on economic reforms, infrastructure investment and improved state capacity. Business stands ready to play its part in this national effort, just as we did in supporting the path to FATF compliance.”