In depth
South Africa reached a significant milestone in strengthening its financial governance when the FATF announced its removal from the grey list following a successful on-site assessment in July 2025. This outcome reflects the impact of sweeping reforms introduced since South Africa's grey listing in 2023 and signals renewed confidence in the integrity of its financial systems. For businesses and investors, the delisting brings the tangible benefits of reduced compliance friction, improved access to global banking services, and stronger foundations for cross-border transactions.
The compliance gaps that triggered enhanced scrutiny
South Africa was placed on the grey list in February 2023 after the FATF identified significant weaknesses in its anti-money laundering and counter-financing of terrorism framework. These included gaps in enforcement, transparency around beneficial ownership, and asset recovery processes. The designation triggered enhanced due diligence requirements, increased compliance costs, and reputational challenges that affected foreign investment.
In response, South Africa launched a comprehensive reform program, addressing all 22 FATF action items. Some notable measures included:
- Expanding the scope of accountable institutions under the Financial Intelligence Centre Act 38 of 2001 ("FIC Act"), through amendments to Schedule 1, bringing crypto-asset service providers and high-value goods dealers into the regulatory net;
- Strengthening beneficial ownership transparency through amendments to the Companies Act 71 of 2008 and the launch of the Companies and Intellectual Property Commission's Beneficial Ownership Register, which requires the disclosure of interests of 5% or more, and blocks annual returns without prior beneficial ownership filings;
- Improved enforcement capacity, with increased funding for the Hawks and the National Prosecuting Authority;
- Stricter reporting obligations under sections 28 and 29 of the FIC Act, including cash threshold reporting and suspicious transaction reporting; and
- Anti-corruption amendments under the Prevention and Combating of Corrupt Activities Act 12 of 2004, including the creation of a new offence for the failure to prevent corrupt activities by private companies and state-owned entities.
Restored confidence and reduced risk
South Africa’s exit from the FATF grey list is a clear signal to the global market: systemic risk has been reduced and financial credibility has been restored. For businesses, this translates into smoother cross-border transactions, lower compliance costs, and improved access to international banking services. The reputational uplift also means better credit ratings and more competitive financing conditions for both sovereign and corporate debt.
Importantly, these wide reforms are structural and not cosmetic. Measures such as expanded beneficial ownership transparency, heightened supervision of high-risk sectors, and strengthened enforcement capacity are now embedded in South African law and practice. This alignment with global standards reduces the risk of future grey listing, and creates a more predictable regulatory environment for businesses, with a clear commitment to compliance and governance.
However, these benefits come with heightened expectations. Companies operating in South Africa will be required to maintain robust risk-based compliance programs, ensure accurate beneficial ownership disclosures, and implement enhanced due diligence for high-risk transactions.
Lessons from Morocco: building a culture of compliance
Morocco’s successful exit from the FATF grey list offers valuable lessons for South Africa as it navigates its own post-delisting phase. The country's transition from FATF grey listing in 2021 to full delisting in 2023 illustrates that sustainable compliance demands more than technical adjustments: it requires systemic change and cultural buy-in.
To achieve this, Morocco introduced a verification-based beneficial ownership regime, cross-referencing ownership data against multiple sources and imposing sanctions for inaccurate or incomplete filings. This approach strengthened transparency and accountability across corporate structures.
The country also modernized its Financial Intelligence Unit through a digital case management system designed to prioritize suspicious transaction reports and mutual legal assistance requests. This enabled faster asset recovery and improved coordination with prosecutors, ensuring timely attention to high-risk cases.
Further, Morocco reinforced its supervisory framework beyond banking, targeting sectors, such as legal professionals and real estate agents, and applying meaningful penalties for non-compliance. These measures extended oversight beyond traditional banking, addressing vulnerabilities in high-risk industries. Morocco also invested in judicial training and prosecutorial specialization, equipping courts and enforcement agencies to handle complex money laundering cases and confiscation proceedings effectively. This professionalization of enforcement created a strong deterrent against financial crime.
These operational reforms were supported by a sweeping legislative overhaul responding to FATF’s 2019 Mutual Evaluation Report. Amendments to key laws, targeted decrees, and the creation of new authorities expanded powers to enforce compliance. The reforms covered confiscation measures, targeted financial sanctions, DNFBP due diligence, transparency of legal persons, and international cooperation. Middle East and North Africa Financial Action Task Force (MENAFATF)'s 2022 Enhanced Follow-Up Report reflected these advances, upgrading Morocco’s technical compliance ratings.
Delisting marked a milestone in Morocco’s commitment to financial integrity and alignment with global standards.
Collectively, these reforms fostered not only a technical compliance but a culture of integrity and accountability that has kept Morocco off the grey list since its delisting, positioning the country as a model for jurisdictions, such as South Africa, seeking long-term financial integrity.
Staying off the grey list: sustaining momentum
South Africa’s delisting is a welcome development, but it also presents a new set of challenges. The country’s financial system is larger and more complex than Morocco’s and maintaining compliance will require ongoing effort across multiple fronts.
First and foremost, political commitment must remain strong. The reforms that led to delisting were driven by coordinated action across government departments, regulatory agencies, and law enforcement bodies. Sustaining this momentum will require continued leadership and accountability at the highest levels.
Second, enforcement must be consistent and effective. It is not enough to have laws and regulations on the books; they must be applied rigorously, with clear consequences for non-compliance. This includes prosecuting financial crimes, recovering illicit assets, and ensuring that institutions are held to account.
Third, monitoring systems must be continuously improved. Real-time data sharing, risk-based supervision, and inter-agency coordination should become standard practice. The private sector also has a critical role to play in maintaining compliance, particularly in sectors that are vulnerable to financial crime, such as banking, mining, and real estate.
Finally, South Africa must begin preparing for its next FATF mutual evaluation, expected in 2026–2027. This will be an opportunity to demonstrate that the reforms are not only effective but sustainable. Lessons from Morocco, show that success depends on embedding verification mechanisms, strengthening judicial capacity, and maintaining active international cooperation.
Conclusion
South Africa’s exit from the FATF grey list marks a pivotal moment in its financial governance journey. The reforms have restored confidence and positioned the country for growth, but the real challenge lies in sustaining compliance. By investing in regulatory capacity, enforcing laws consistently, and learning from global leaders, South Africa can build a resilient, transparent financial system that attracts investment and is able withstand future scrutiny.
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Additional authors:
Kenza Zerkdi and Sunesan Reddy, Trainees, have contributed to this legal update.
