South Africa has officially been greylisted

South Africa has been added to a global financial watchdog’s so-called grey list, which identifies countries with deficiencies in combating illegal financial flows, a decision that will tarnish the country’s worldwide reputation and may increase costs for banks and asset managers.

The Financial Action Task Force (FATF) announced the judgement on Friday.

Nigeria, Africa’s largest economy, was also put to the list, according to the report.

According to a 2019 report, Africa’s largest industrialised economy fell short of satisfying all 11 of the FATF’s effectiveness standards to combat money laundering and terrorism funding.

Such conclusions came after a nine-year period of widespread bribery under former President Jacob Zuma.

While President Cyril Ramaphosa’s government, which took office after the governing party pushed Zuma to resign in early 2018, has attempted to remedy the shortcomings, it has fallen short of the mark.

The central bank has previously cautioned that grey-listing may have far-reaching ramifications for South Africa’s financial system, including capital and currency outflows as well as increased transactional, administrative, and financing costs for banks.

Last month, Finance Minister Enoch Godongwana stated that the government is “hopeful” that legal changes to address the country’s weaknesses in combating illicit money flows will help it avoid being designated as a jurisdiction subject to heightened surveillance.

In December, Ramaphosa signed into law two significant pieces of legislation that addressed some of the watchdog’s concerns.

South Africa’s presence on the grey list places it on level with Syria, the Democratic Republic of the Congo, and South Sudan.

The National Treasury has stated that it is investigating how Mauritius and other countries got to be removed off the grey list.