International financial crime watchdog the Financial Action Task Force (FATF) said on Friday it was adding South Africa and Nigeria to its so-called “grey list” of countries under special scrutiny to implement standards to prevent money laundering and terrorism financing.
The FATF is an inter-governmental organisation that underpins the fight against money laundering and terrorism financing by setting global standards and checking if countries respect them.
Paris-based FATF said the two countries were added to its list following a review.
Being added to the grey list is a reputational setback for the South African government, which has been trying to address shortcomings identified by the FATF.
Analysts say it could also mean South African clients at international financial institutions will be subject to enhanced due diligence checks. It could also complicate South African attempts to access funding and support from multilateral development institutions and official lenders.
The national treasury did not immediately respond to a request for comment.
The watchdog said in a statement that both South Africa and Nigeria have made high-level political commitments to work with the FATF to address the concerns.
The watchdog said it places a country on its “grey list” under increased monitoring when the country has “committed to resolve swiftly the identified strategic deficiencies within agreed timeframe”. — Tassilo Hummel, Alexander Winning and Bhargav Acharya, (c) Reuters