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24 February 2023
Absa’s position on the grey listing of South Africa by FATF
While the decision by the Financial Action Task Force (FATF) to place South Africa on its so-called ‘grey list’ is disappointing, Absa supports the implementation of the recommended FATF reforms, which are intended to strengthen measures to combat money-laundering, terrorist financing and other similar threats to the financial system.
The grey-listing action ultimately raises the cost of transactions as foreign financial institutions will, at least in some instances, apply additional controls to transactions that involve South African entities and individuals.
Absa will continue to participate in industry efforts through the Banking Association of South Africa in support of broader national efforts required by law enforcement and other government agencies to implement the remaining recommended national reforms, in order for South Africa to be removed from the FATF ‘grey-list’ as swiftly as possible.
Absa already complies with rigorous international anti-financial crime standards and regulations as required to access global financial markets.
It is unlikely that the grey-listing action will have any material direct impact on Absa in the short term. In the longer term, any negative economic impact may have a general negative impact on the country, including the business sector and society at large.
FATF regularly reviews countries for compliance with money laundering, terrorist financing and similar threats and publishes updates. In its latest update, FATF added Nigeria to its ‘grey-list’ while Uganda remains on the list.
Q: What is FATF?
A: The Financial Action Task Force (FATF) is a 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.
The FATF monitors countries to ensure they implement the FATF standards fully and effectively and holds countries to account that do not comply.
Q: What does ‘grey-listing’ mean?
If a country repeatedly fails to implement FATF standards, it can be named a Jurisdiction under Increased Monitoring or a High Risk Jurisdiction. These are often externally referred to as “the grey and black lists”. [Source: www.fatf-gafi.org]
Q: What happens now that South Africa has been greylisted?
A: The listing means that the country will be known to have deficiencies which it still needs to address. This could lead to foreign institutions performing additional controls or reassessing their appetite to do business with entities or individuals in a grey-listed country.
Foreign financial institutions will, at least in some instances, apply additional controls to transactions that involve South African entities and individuals, ultimately raising the cost of transactions.
Q: How can South Africa be removed from the so-called ‘grey list’?
A: FATF has recommended that South Africa implement key actions to comply with FATF standards. The remaining actions must be implemented before FATF will reassess South Africa’s status.
Q: What would be the impact of ‘grey listing’ on banks?
A: While grey listing will likely increase the cost of compliance for all South African banks and make it harder to access international financial markets and facilitate cross-border transactions, Absa has by virtue of following internationally accepted standards been proactively managing these and other risks that may emanate as a result of a possible grey listing.
Q: What is the impact of South Africa’s greylisting on Absa?
A: We don’t expect that the greylisting action will have any material direct impact on Absa in the short term.
Q: What is the impact of South Africa’s greylisting on Absa customers?
A: There is no change in customers’ relationship with Absa, or the way in which customers use our services.
Q: What actions is Absa taking to help ensure that South Africa is removed from the ‘grey list’?
A: Absa will continue to participate in industry efforts through the Banking Association of South Africa in support of broader national efforts required by law enforcement and other government agencies to implement the remaining recommended national reforms, in order for South Africa to be removed from the FATF ‘grey-list’ as soon as possible.
Absa already complies with rigorous international anti-financial crime standards and regulation, as required in order to access global financial markets.
Q: What is the impact of Nigeria’s greylisting on Absa?
A: The impact is negligible as Absa only has a limited presence in Nigeria through a representative office. Customers in Nigeria should contact their local representative if they have any concerns.
Q: What is the impact of the FATF update on Uganda?
There is no immediate impact as FATF has not changed its classification of Uganda, which was greylisted earlier.
Read more about the FATF’s latest update: Home (fatf-gafi.org)