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South Africa Risks a Costly Own Goal as FATF Decision Looms
South Africa has been working for more than two years to clean up its financial reputation. But just as it prepares to be cleared by the Financial Action Task Force (FATF) this month, a new wave of corruption revelations threatens to derail everything.
After a long reform process, the country was expected to finally be removed from the FATF’s grey list, a global watchlist for nations with weak controls against money laundering and terror financing. Yet, as economist Kevin Lings from Stanlib warns, the timing of recent developments could not be worse.
From Hope to Hesitation
South Africa was grey-listed in February 2023 after FATF identified 22 shortcomings in how the country prevents and prosecutes financial crimes. Since then, Treasury, the Reserve Bank, and law enforcement agencies have spent years patching gaps, strengthening regulations, and tightening oversight.
By June 2024, it looked like those efforts were paying off. FATF reported that South Africa had made “substantial progress” and had “mostly completed” its remedial actions. A site visit in July 2025 went smoothly, and Treasury confirmed optimism ahead of the FATF’s plenary meeting on 24 October, where the decision on South Africa’s removal would be made.
But that optimism is now clouded by the findings of a new parliamentary inquiry into policing, which has exposed fresh allegations of corruption and mismanagement at senior levels.
“This is exactly the kind of governance failure that got us on the grey list in the first place,” Lings cautioned. “If the FATF sees this as systemic rather than isolated, they could delay South Africa’s removal until they’re satisfied that real accountability follows.”
The Real Cost of Grey Listing
The FATF grey list isn’t symbolic; it’s expensive. Countries on the list face greater scrutiny from global banks, investors, and regulators. For South Africa, where more than half of GDP comes from trade, this means slower transactions, higher compliance costs, and declining investor confidence.
“It’s added a meaningful layer of cost to doing business,” Lings explained. “For a G20 country, being listed alongside states like South Sudan or Syria is an embarrassment.”
The economic consequences have been visible: weaker foreign investment, less interest in South African bonds and equities, and slower growth.
“Foreign investors want stability and integrity,” Lings said. “The grey list signals the opposite. It’s difficult to put an exact number on the damage, but it’s clear the impact has been significant.”
A Chance at Redemption, Or Another Setback
If FATF clears South Africa later this month, it could mark a turning point. Removal from the list would boost international confidence, strengthen the rand, and give the country a reputational lift at a time when growth and service delivery remain under pressure.
“It would be a meaningful positive for sentiment,” said Lings. “It tells the world South Africa can correct its mistakes and operate with credibility.”
Yet, the economist cautioned that new corruption allegations could push FATF to pause its decision, waiting to see how the country responds. “They’ll want evidence of prosecution, not just another report that fades away,” he added.
The Bigger Question: Political Will
For all the technical improvements, South Africa’s biggest challenge may be political. The FATF wants proof not only of compliance but also of commitment, that the country can prosecute those responsible for corruption, no matter how powerful.
“Have we got the ability? Have we got the will? How far does it reach? Is the president implicated?” Lings asked pointedly. “Those are the questions international observers will be asking.”
The coming weeks may determine whether South Africa can finally step off the grey list or score another painful own goal by stumbling just short of the finish line.
Also read: Murray & Roberts’ Big Win: Cementation Sale Brings Hope Amid Liquidation
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Source: Business Tech
Featured Image: Salaamedia
