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South Africa is now at great risk of being subject to increased monitoring (greylisted) by the Financial Action Task Force (FATF) due to weaknesses in the country’s ability to enforce anti-money laundering and terrorism-funding regulations, and to investigate and successfully prosecute financial crimes.
The Governor of the Reserve Bank, Lesetja Kganyago, confirmed during a meeting of the standing finance committee that if South Africa were to be “greylisted” it will have dire consequences for the economy, as the move will hamper South Africa’s ability to attract investment and international financial transactions in the country.
Democratic Alliance (DA) Shadow Minister of Finance Dion George said the DA demands that Treasury acts with haste to implement the recommendations by the Financial Action Task Force (FATF) to avoid the country sliding into an economic catastrophe.
The impact on the economy and the financial system is expected to become progressively worse. “Together with a deteriorating balance-of-payments situation, being greylisted will compound to economic stagnation. Other threats to South Africa’s economy and financial system include banks operating in South Africa would face increased inspections by regulatory authorities, which means higher transactional, administrative, compliance, auditing and funding costs.”