Here’s a polished
South Africa and Nigeria are on track to be removed from the Financial Action Task Force’s (FATF) grey list as early as next month, signaling a positive turn for two of Africa’s largest economies.
The two nations were added to the grey list in February 2023 due to shortcomings in tackling illicit financial flows. In recent weeks, FATF assessors from Paris conducted on-site visits to review each country’s action plans, along with those of Burkina Faso and Mozambique. According to sources familiar with the process, all four countries have shown significant progress.
All four nations are expected to come off the list on October 24, during the FATF plenary in Paris. Final decisions have not yet been made, as listings require consensus among FATF members, including the US, UK, European Commission, China, Japan, and India.
“South Africa and Nigeria exiting the grey list would certainly be good for sentiment,” said Lauren van Biljon, senior portfolio manager at Allspring Global Investments UK. “It would confirm that the reforms implemented after grey listing are substantial and lasting.” While the immediate market impact may be modest, a short-term boost in asset prices is possible, Van Biljon added.
Why the Grey List Matters
The FATF’s grey list draws close attention from global investors. Countries on the list face increased scrutiny, as the designation raises concerns about the integrity of their financial systems. A 2021 International Monetary Fund (IMF) report found that grey-listed nations often experience significant reductions in capital inflows.
South Africa’s National Treasury stated it would comment once the FATF’s decision is public. In July, after the on-site visit, Treasury said the country had “substantially completed all 22 action items” required for removal.
Progress Across the Continent
Mozambique has completed all 26 required actions for delisting, according to Luís Abel Cezerilo, national coordinator for the process. He highlighted that removal from the list would come at a critical time, as TotalEnergies prepares to resume its $20 billion natural gas export project.
In West Africa, Burkina Faso has implemented all 37 measures needed for grey list removal, according to Madi Tapsoba of the Inter-Governmental Action Group against Money Laundering.
FATF Updates and Focus
Under Mexican official Elisa de Anda Madrazo, FATF has updated its grey-listing approach. Wealthier member countries now face greater scrutiny, while least-developed countries, which pose lower systemic risks, receive comparatively less attention.
Beyond grey-list monitoring, FATF sets global standards for countering money laundering and terrorist financing. It also conducts research to guide best practices on emerging financial issues, from virtual assets to sextortion.