SA’s removal from the Financial Action Task Force's (FATF's) greylist on Friday has been hailed as a significant achievement and “a strong vote of confidence in the country’s ability to combat money-laundering and other illicit financial crimes”.
This is according to Dr Mmusi Maimane, chairperson of the Standing Committee on Appropriations, who added that “this milestone reflects the collective efforts of government, the private sector, and law enforcement agencies to strengthen our financial integrity systems”.
This comes as there are still technological challenges, such as the complexities of implementing a Travel Rule to ensure traceability of crypto assets, as well as the fact that pre-registered SIM cards could enable illicit money flows as they are untraceable.
SA was placed on the greylist in February 2023 due to deficiencies in its anti-money-laundering and counter-terrorism financing regime, which was found to have insufficient mechanisms to combat financial crimes.
Alvin Botes, deputy minister of the Department of International Relations and Cooperation, has said South Africa loses an estimated $3.5 billion (R60.19 billion at the current exchange rate of R17.20 to the dollar) to $5 billion (R86 billion) each year “to tax abuse, trade mis-invoicing, illegal capital transfers and profit-shifting”.
FATF’s decision to greylist SA resulted in reputational damage, increased scrutiny by international banks, increased borrowing charges, as well as a drop in foreign investment, all of which adversely impacted already slow economic growth.
In welcoming SA’s removal from the list – as it had completed all 22 requirements – National Treasury also cautioned that the delisting was “only the start of a broader process to continue to strengthen key institutions, improve enforcement and governance processes”.
From the first half of 2026 through to October 2027, the country will again come under scrutiny, National Treasury noted in a statement, and preparations for this are under way.
Travel Rule challenge
Among the tech issues that SA needs to overcome is the Travel Rule, a global standard designed to combat money-laundering and terrorism financing, mandated by the Financial Intelligence Centre (FIC) with an end-April deadline.
This rule requires crypto asset service providers, such as banks and other crypto asset service providers, to share originator and beneficiary information with other providers when it comes to transactions over a certain value, which is R5 000 locally and varies for other jurisdictions.
As of late 2024, 45 FATF member countries have already implemented, or are working on implementing the Travel Rule, covering most of the major global financial markets.
Yet, it seems that banks are grappling with implementation. Tom Schoon, head of partnerships for Africa at verification platform Sumsub, says many local and African institutions operate with legacy systems that are not designed to handle the complex, real-time compliance checks required by the regulation.
“The financial services landscape in Africa is also highly fragmented, with banks often relying on a patchwork of service providers to meet various compliance needs,” Schoon says. “This fragmentation leads to inefficiencies, increased costs, and a higher risk of errors or gaps in compliance.”
Compliance presents challenges for banks given the cost of implementing a system to handle the rule, as well as the complexity of implementing a blockchain system on top of legacy technology, according to Sergio Barbosa, CEO of banking and payments integration platform FutureBank.
SWIFT’s blockchain solution
However, progress is being made after the SWIFT global messaging network for banks said in September that it was adding a blockchain-based shared ledger to its technology infrastructure.
This move, which is designed to help banks move regulated digital money safely and at scale, helps enable financial institutions to implement the Travel Rule by embedding compliance protocols directly into transactions using smart contracts. This “compliance by design” approach automates the collection and sharing of required information for tokenised asset transfers.
Work has started with a group of more than 30 financial institutions globally, including South Africa's Absa and FirstRand, to design and build the ledger, focused initially on real-time 24/7 cross-border payments.
Cost of non-compliance
Standard Bank says it remains fully compliant with the FATF Travel Rule, which requires financial institutions to include identifying information on both the originator and beneficiary of wire transfers.
FNB says it is fully aware of the Travel Rule and its requirement that certain identifying information about both the sender and receiver of a financial transaction must accompany the transfer of assets between financial institutions.
“This measure is intended to combat money-laundering, terrorist financing and other illicit activities by ensuring authorities can trace the origin and destination of funds. FNB always ensures a regulatory-first approach and this is no different as FNB will ensure compliance when it enters the market.”
There are serious consequences for entities that don’t comply. Fines for non-compliance with the Travel Rule can include administrative penalties of up to R10 million for individuals and R50 million for legal entities, and criminal penalties of up to R100 million or 15 years' imprisonment for serious offenses.
Non-compliance can also result in loss of banking licences and exclusion from international financial networks, warns the payments integration platform. So far, no punitive measures have been taken by the FIC, FutureBank says.
Tech in the pipeline
The South African Revenue Service (SARS) is still rolling out its digital Traveller Management System for monitoring cash and bearer negotiable instruments at borders, first announced in October 2022.
In a statement released on Friday following the FATF’s announcement, it said this system, which digitally monitors cash flows in and out of the country and involves sharing information with the FIC, is expected to become mandatory by the end of 2025.
In its 2024/25 annual report released in September, the FIC stated that a cash declaration platform was deployed at some ports of entry for testing in September 2024, with the FIC assisting SARS with the technology platform pilot. In that financial year, the FIC received 10 650 cash conveyance reports from SARS.
Law firm Webber Wentzel notes that “although there is excitement following South Africa's successful delisting, the country is not completely off the FATF's radar”.
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