South African Reserve Bank optimism that South Africa could soon be removed from an international grey list is in part due to actions it has taken to mitigate against the risk that tech outages that could destabilise the country’s financial system.

According to the Financial Stability Review report for the first half of 2025 released late last week, the Reserve Bank’s Financial Sector Contingency Forum (FSCF) has developed strategies to keep South Africa’s financial system operational in the event of an electricity grid collapse, undersea cable disaster or even a malicious distributed denial-of-service attack.

“Playbooks have been developed to respond to any operational disruption that may prevent the financial system from providing financial products and services uninterruptedly,” said the report. “From an operational resilience perspective, the FSCF has developed frameworks for responding to shocks such as a loss of access to national and international financial and technological infrastructure.”

South Africa was placed on the Financial Action Task Force (FATF) grey list in February 2023 due to weaknesses in the country’s ability to address money laundering and counter terrorist financing activity through appropriate regulatory frameworks. Grey-listing has a negative impact on a country’s credit rating, its ability to attract foreign investment and its financial relationships with other sovereign states.

According to the Reserve Bank report, the FATF said last week that South Africa had “largely addressed” all 22 action items agreed to as part of the action plan aimed at lifting the country out of grey-list status. The Reserve Bank expects South Africa will be removed from the grey list by October, following an inspection visit by FATF officials.

The bulk of the work around South Africa’s grey list exit centred on financial governance issues such as improving the rates of investigations and prosecutions in cases of “serious and complex” money laundering and strengthening the country’s anti-terrorist financing framework.

Centre stage

However, technology’s role took centre stage in considerations about system resilience in the face of external shocks.

“Operational disruptions such as the CrowdStrike incident in July 2024 or the failure of undersea data cables in March 2024 could also result in reduced – or even a complete loss of – access to critical international financial and technological infrastructure,” said the Reserve Bank.

According to the report, South Africa is reliant on nine undersea cables to connect it to the rest of the world. Four of these were damaged in the March 2024 incident, off the coast of West Africa, presenting a notable vulnerability to the domestic financial system. The FSCF designed and created an alternative connectivity project to mitigate against such incidents, it said.

Read: Reserve Bank to open national payments system to fintechs

The turnaround at Eskom, following the worst year of load shedding in 2023, has decreased the risk that a national power blackout could disrupt the financial system. But the integrity of domestic infrastructure still represents a systemic risk, especially due to the “weak financial position of numerous municipalities” and “sustained pressure on the fiscus”.

Part of the Reserve Bank’s risk mitigation strategy included the simulation of high-risk scenarios to improve preparedness for a crisis. Two such exercises were conducted in the first half of 2025, with the first aimed at testing the processes of the Reserve Bank as the resolution authority in the event that a “medium, non-important” bank failed. The second simulation was an industry-wide desktop test of the procedures for an orderly closure and re-opening of markets, irrespective of the trigger event, the Bank said.

In the past year, security breaches and ransomware attacks have risen sharply due to hacker organisations adopting AI tools to improve the scale and effectiveness of their attacks. The Reserve Bank said it ran an exercise from 11-14 March to simulate a cyberattack on South Africa’s financial infrastructure.

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“Increasing the operational resilience of the domestic financial system against the failure of critical national infrastructure remains a key financial stability priority,” said the Reserve Bank. – © 2025 NewsCentral Media

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