A Major Milestone: South Africa Sheds EU “High-Risk” Label After FATF Success

In a significant boost to its international financial standing, South Africa has been officially removed from the European Union’s list of High-Risk Third Country Jurisdictions. This welcome development is a direct diplomatic and economic dividend of the country’s removal from the FATF grey list in 2025, rewarding its strengthened efforts to combat money laundering and terrorism financing.

Being on the EU list, a status South Africa held since August 2023, meant that financial institutions across the bloc were legally required to apply enhanced due diligence to transactions involving South African parties. This translated to “more rigorous and intrusive checks, increased documentation requirements, continuous monitoring and senior management approval,” as National Treasury explainedadding costly friction to trade, payments, and investment flows.

Recognition of Reformed Systems

The EU, in a statement acknowledging the strengthened Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regimes of South Africa and five other African nations, noted the countries had “addressed technical deficiencies to meet the commitments in their action plans.” The Commission concluded these jurisdictions “no longer have strategic deficiencies” in their financial integrity frameworks.

This delisting does not mean transactions will face no scrutiny, but it allows EU institutions to adjust their risk assessments, potentially streamlining business and financial interactions.

A Journey of Reform, With More Work Ahead

South Africa’s path to this point began with its 2023 FATF greylisting, which highlighted weaknesses in prosecuting serious financial crimes, supervising non-financial professions, and identifying beneficial ownership in complex corporate structures. Considerable legal and regulatory reforms since then paved the way for the FATF’sand now the EU’svote of confidence.

National Treasury struck a balanced note, cautioning that the delisting “does not mean that all South Africa’s challenges… have been resolved,” recognising that much work remains. The country is already preparing for the next FATF evaluation cycle, with a final report due in October 2027.

For South Africa, this is more than a bureaucratic tick-box. It is a tangible step towards restoring global confidence, reducing the cost and complexity of cross-border commerce, and signaling that the country is serious about cleaning up its financial systems. The “naughty list” era is over; the hard work of maintaining this clean slate has just entered a new phase.

{Source: MoneyWeb}

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