The Financial Action Task Force (FATF) is the leading global forum for the development and monitoring of international standards against money laundering and terrorism financing.
The FATF was initially commissioned by the G7 countries during an economic summit in Paris in 1989 as a temporary task force to develop policies and make recommendations that combat money laundering. In 1990, the FATF set up an international framework by introducing the Forty Recommendations (or FATF standards) on money laundering (Pavlidis, 2021; Perkins, 2021; Shah, 2018).
The “Forty Recommendations” is a key document of reference which comes with interpretive notes, guidelines and best practices. The recommendations cover the criminalisation of money laundering, the regulation of the financial system, the confiscation of money laundering proceeds and international cooperation.
These recommendations have become the reference text for anti-money laundering strategies around the world and have influenced the work of other international bodies, such as the Council of Europe and the European Union (Pavlidis, 2021). As such, when the FATF greylists a country, the EU automatically blacklists the country under review, while the UK places it on its list of high-risk countries.
TIMELINE OF KEY EVENTS
2019: Peer review undertaken of South Africa’s anti-money laundering (AML) and Combatting the Financing of Terrorism (CFT) system.
October 2021: Mutual evaluation report adopted by FATF identifying serious weaknesses in South Africa’s AML/CFT framework and effectiveness. One-year observation period begins.
August 2022: South Africa submits a report on its technical compliance.
October 2022: South Africa submits a further report to FATF on its technical compliance and effectiveness, demonstrating implementation of recommended actions.
October 2022: Observation period ends with FATF plenary.
December 2022: The regional subgroup of the International Co-operation Review Group submits its report on South Africa’s progress on recommended actions and invites South Africa to respond.
January 2023: Face-to-face meetings are held between FATF countries and South Africa.
February 2023: FATF plenary is held to consider progress and possibly adopt an action plan that may include grey listing.
(This report was commissioned by Business Leadership South Africa (BLSA). Intellidex is solely responsible for the content of this report.
Authors – Stuart Theobald, Nxalati Baloyi and Peter Attard Montalto)