Johannesburg - The Financial Action Task Force’s (FATF) recent greylisting of South Africa is a damning indictment of our criminal justice system and the government’s inability to combat financial crimes such as money laundering and terrorism financing, the DA says.
DA spokesperson for finance Dion George said it had escalated South Africa’s problems and weakened the country.
“This situation has arisen primarily due to the inadequacy of our legal framework and the failure of the authorities to prosecute those responsible for such offences.
“The greylisting has placed our nation at significant risk, as the rest of the world now views South African companies and individuals as high-risk counterparties in global transactions.
“This development is entirely unacceptable, and it is incumbent upon our government to take immediate action to rectify this untenable position. We must restore confidence in our financial system and demonstrate to the international community that South Africa is a responsible and trustworthy partner in global trade,” George said.
The country has been given until November 2023 to prove that it is ready to improve the country’s outlook and remedy its structural deficiencies in countering money laundering and the financing of terrorism.
Momentum Investments economist Sanisha Packirisamy said it was imperative that the country turn around the situation.
“If we fail to demonstrate satisfactory progress on these remedial actions by February 2023, a plenary vote of the FATF members will determine the fate of the country’s greylisting status.”
George added that the immediate effect of the greylisting would result in higher costs of doing business.
“The result of this greylisting will lead to South African clients being subject to enhanced due diligence, which will increase the costs of doing business for South African companies and individuals trading internationally or holding bank accounts or investment accounts abroad. This will also complicate access to funding from non-profit organisations and multilateral development assistance.”
He said it would also result in the country facing increased costs in managing correspondent banking relationships and effect the gross domestic product.
“This will have significant implications for South Africa’s economy, ranging from less than 1% to a 3% reduction in GDP, depending on how quickly we can exit the greylist. Additionally, our reputation will suffer from the negative publicity from the greylisting.
“The gravity of the situation requires that our top priority be to take swift action to restore our reputation and regain the trust of the global community, so that SA can exit the greylist as soon as possible. Government must take a comprehensive and collaborative approach to address the remaining concerns of FATF by taking co-ordinated action across departments and institutions – from the prosecuting authorities to the Hawks, the Financial Intelligence Centre, the Department of Home Affairs, police, Sars, and others.”
George said it was the government’s duty to remedy the situation, adding that the government must commit to rebuilding the country’s institutional capacity, processes and systems in key parts of the supervisory, investigation and prosecution services.
The Star