After facing economic shocks in recent years, South Africa received another blow when it was grey listed by the Financial Action Task Force (FATF) earlier this year. The country’s efforts to improve compliance with international standards in preventing illegal financial activities were deemed insufficient. The grey listing tarnished South Africa’s reputation and increased the cost of doing business in the country. The FATF had doubts about the country’s legal frameworks’ ability to prevent terrorist funding, money laundering, and proliferation funding.
South Africa has made significant improvements to address the FATF’s concerns, but it still faces the challenge of completely removing itself from the grey list within the next three years. Failure to do so could lead to dire consequences, including the possibility of being blacklisted. This worst-case scenario would severely limit South Africa’s access to international financial services, as member states of the FATF and other international bodies would impose economic penalties and restrictions. Some financial institutions may stop providing services to South African businesses altogether.
Blacklisting would make it difficult for South African businesses to engage in cross-border transactions, access loans, or establish international banking relationships. Trade deals with the country’s biggest partners could be reduced or reversed due to increased regulatory risks. The remaining trading relationships would become more expensive and face stricter regulations, making international trade with South Africa less enticing.
In such a precarious situation, it is crucial for businesses to keep costs down, particularly for international payments. Moving away from traditional banks and forex services, which often include hidden fees, can help businesses secure the best deals on international transactions. This preparation and cost-conscious approach will contribute to the resilience of businesses operating in South Africa.
Another way to maximise the value that they’re getting out of every transaction is by using a forex provider that is committed to providing transactions at the lowest possible cost and with maximum transparency. That provider should additionally be able to provide assistance with regulations and compliance and by assisting with supporting documents to ensure deals go through timeously. Additionally, it should offer personalised service, hassle-free onboarding, and instant conversions. With these simple measures, any business will ensure it is better equipped to navigate an international trade environment that is uncertain and can suddenly change on a dime.
