Key Takeaways
- South Africa has been removed from the European Union’s list of "high-risk third country jurisdictions" for money laundering and terror financing.
- The removal is a result of South Africa’s efforts to strengthen its systems against money laundering and terror finance, and address technical deficiencies identified by the Financial Action Task Force (FATF).
- The country was previously removed from the FATF’s grey list in October 2025, and from the UK’s similar list of countries with a high risk for money laundering and terror financing.
- South Africa will undergo a new round of evaluation by the FATF in the coming months, with a final report scheduled to be presented in October 2027.
Introduction to the Issue
South Africa’s efforts to combat money laundering and terror financing have received a significant boost, with the country being removed from the European Union’s (EU) list of "high-risk third country jurisdictions". This decision, which takes effect on January 26, is a result of South Africa’s progress in strengthening its systems against these financial crimes. The removal is a welcome development, as it is expected to reduce the friction and scrutiny that South African businesses and individuals face when conducting financial transactions with EU countries.
Background on the Greylisting
South Africa was added to the EU list in August 2023, as a consequence of its greylisting by the FATF in February 2023. The greylisting meant that financial institutions in the EU were required to apply a higher level of scrutiny to transactions involving parties in South Africa, resulting in more rigorous and intrusive checks, increased documentation requirements, and continuous monitoring. This had a negative impact on trade, payments, and investment between South Africa and EU countries. However, with the removal from the grey list, these restrictions are expected to be lifted, making it easier for South African businesses to operate in the EU.
The Removal from the EU List
The EU’s decision to remove South Africa from its list of high-risk countries is a significant development, as it recognizes the country’s efforts to strengthen its systems against money laundering and terror finance. According to the EU, South Africa has "strengthened the effectiveness" of its systems and addressed technical deficiencies to meet the commitments in its action plan. The removal is also a result of the country’s progress in implementing its action plan, which was developed in response to the FATF’s identification of strategic deficiencies in South Africa’s anti-money laundering and counter-terrorist financing framework.
Implications of the Removal
The removal from the EU list is expected to have a positive impact on South Africa’s economy, as it will reduce the friction and scrutiny that businesses and individuals face when conducting financial transactions with EU countries. This is expected to increase trade, investment, and economic growth, as well as improve the country’s reputation as a safe and secure destination for investment. However, the National Treasury has emphasized that the removal from the FATF and EU lists does not mean that all of South Africa’s challenges in implementing its systems against money laundering and terror finance have been resolved.
Future Evaluations and Challenges
South Africa will undergo a new round of evaluation by the FATF in the coming months, with a final report scheduled to be presented to the FATF plenary in October 2027. The country will need to continue to strengthen its systems against money laundering and terror finance, and address any remaining deficiencies in its framework. The National Treasury has begun preparing for the evaluation, incorporating the lessons learned and experience gained during the process to exit the FATF greylisting. The evaluation will provide an opportunity for South Africa to demonstrate its commitment to combating financial crimes and to further strengthen its reputation as a safe and secure destination for investment.
Conclusion
In conclusion, South Africa’s removal from the EU’s list of high-risk countries is a significant development, recognizing the country’s efforts to strengthen its systems against money laundering and terror finance. While there is still much work to be done, the removal is a positive step forward, and is expected to have a positive impact on the country’s economy. As South Africa prepares for its next evaluation by the FATF, it is essential that the country continues to prioritize the implementation of its anti-money laundering and counter-terrorist financing framework, and addresses any remaining deficiencies in its systems. By doing so, South Africa can further strengthen its reputation as a safe and secure destination for investment, and promote economic growth and development.
