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how the fatf grey list affects south africans

FATF Grey List: Should South Africans be afraid about their financial plans?

Is it true that grey clouds gather over South Africa’s economy? Recent media reports have noted that South Africa is at risk of being placed on the FATF’s Grey list of countries. Whilst this is still uncertain as the FATF will review all relevant processes, South African investors should know the impact of a negative verdict on their financial situation and investment portfolios.  

If the FATF’s assessment is positive, then no harm is done. But being prepared for a negative decision by the FATF is probably the correct move for investors who would like to make sure that their financial plans succeed. Financial planning with the help of fully qualified financial advisers is a way to achieve your financial goals. Holborn’s advisers are on hand to help you build the plan that will secure your financial future. But first, let’s see what FATF means and how its decisions could affect the South African economy. 

What is the FATF?

As noted earlier, FATF stands for Financial Action Task Force. According to the FATF’s website, “The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog. The inter-governmental body sets international standards that aim to prevent these illegal activities and the harm they cause to society. As a policy-making body, the FATF works to generate the necessary political will to bring about national legislative and regulatory reforms in these areas.”

What is the FATF’s mission?

In addition, it is mentioned that “The FATF reviews anti-money laundering and terrorist financing techniques and continuously strengthens its standards to address new risks, such as the regulation of virtual assets, which have spread as cryptocurrencies gain popularity. The FATF monitors countries to ensure they implement the FATF Standards fully and effectively, and holds countries to account that do not comply.”

The FATF was established in 1989 during the Paris G7 Summit, aiming to combat money laundering. Twelve years later, the FATF’s mandate was expanded to combat terrorist financing.

What does it mean to be on the FATF’s Grey list?

The FATF Grey list includes countries at high risk when it comes to money laundering and financing terrorism. It is not easy for a country to enter the FATF’s Grey list. However, if a country is grey-listed, its economy suffers a severe blow. 

Each quarter, the Financial Action Task Force (FATF) releases one of two public documents highlighting which jurisdictions have insufficient procedures to prevent money laundering and terrorism financing (AML/CFT). Publicly naming nations with inadequate AML/CFT regimes through the FATF’s mechanism has been successful.

Will South Africa join the Grey list?

The report’s main takeaways were that South Africa shows an awareness of money laundering dangers from a domestic viewpoint but has a limited awareness of the vulnerability scale from a global perspective.

The ability of the South African government to prosecute cases of money laundering and terrorist financing has also been called into question, as has the expertise of the country’s law enforcement authorities.

The deadline for the country to show the FATF that it has procedures in place to meet the recommendations is the end of October 2022. In February of 2023, the committee will get together to discuss adding South Africa to the watch list.

Can it prevent me from moving funds around the world?

Being greylisted by the FATF puts a strain on investors and businesses plans. Businesses with international transactions and partnerships abroad are the first to face the consequences of such an action as they are subject to additional due diligence. 

If the country’s reputation takes a hit, banks and firms will be less likely to want to do business there, and this will have a knock-on effect on the economy as a whole. The specifics vary by jurisdiction, but in general, banks and other corporations will become more vigilant in conducting due diligence on their clients.

How can I protect myself and my family from the risks?

There are many ways to protect your family’s financial future as well as yours. Financial planning can help you achieve your financial goals even in such situations. If you would like to learn more, please watch our webinar, which will answer many of your questions. 

Holborn South Africa can help you prepare for every outcome

The South African government has scrambled to alter processes to avoid suffering the consequences of becoming a member of the FATF’s Grey list. Some analysts suggest that it might be already too late. In the next few months, the FATF is expected to announce its decision concerning South Africa.

Regardless of the decision, there is no reason not to take some precautions and ensure that your financial plan remains in line with your goals. Holborn’s African division is one of the most successful in the independent financial advice industry, helping individuals and businesses invest in South Africa or abroad. Whether you want to invest, take out insurance, secure a second passport or plan your taxes, our team of experienced and fully qualified financial advisors is on hand to help you. 

Get in touch with us and expand your financial horizons. 

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