President Cyril Ramaphosa said on Monday that government has committed more spending to counter money-laundering and terrorism financing, as he welcomed South Africa’s exit from the Financial Action Task Force (FATF) grey list.

He wrote in his weekly letter to the nation that exiting the grey list demonstrated that government’s anti-money laundering system was beginning to act against corruption and other financial crimes.

He said it laid the basis for further improvements.

“…it is a signal of our collective determination to ensure that the malfeasance of the past is well behind us,” he said.

Last week, the FATF announced that South Africa had exited the FATF grey list, following the conclusion of meetings of the FATF Plenary that took place in Paris, France.

Ramaphosa said the exit boded well for the integrity and reputation of South Africa’s financial system, its status as an investment destination and for the economy.

In 2023, South Africa was placed on its ‘grey list’ for falling short of certain international standards.

He said that just over two years since the FATF identified deficiencies that had rendered South Africa increasingly vulnerable to financial crimes, the dedication of a multidisciplinary team led by the National Treasury had culminated in formal exit from the grey list.

He said this was a boost for South Africa’s international reputation and global standing.

“Grey listing results in a country being seen as risky for investors. The practical implications are that countries have greater difficulties obtaining credit and access to international financial services. There is reduced foreign direct investment and even capital outflows, and restrictions on cross-border transactions,” he explained.

He explained that the impact of South Africa’s exit from the FATF grey list would reduce pressure on citizens, businesses and the government.

“Ultimately, the return of international financial confidence and a reduced risk perception will attract more foreign direct investment. As our currency strengthens, the cost of living for citizens and doing business will improve,” he added.

He noted that legislative amendments had been made to enable for more stringent reporting regulations around beneficial ownership.

“…this is so we know who ultimately owns, controls and benefits from a company, not just those who are listed as shareholders on paper.

“These changes will make it much more difficult for individuals and syndicates to funnel the proceeds of their corrupt activities through complex webs of shell companies, trusts and companies owned by friends and relatives,” he explained.

Ramaphosa pointed out that to close high-risk loopholes around terrorism financing, government had introduced regulatory amendments to enable the investigation and prosecution of such cases.

He said government is steadily rebuilding institutions weakened by State capture, increased vigilance, not complacency.

He acknowledged that work still needs to be done to reduce and prevent financial crimes, and to ensure speedier investigations, prosecutions and convictions of those committing such crimes.

“With the necessary regulatory frameworks in place, our focus must now be on improving and strengthening implementation. We will also sustain enforcement within both public and private institutions and deepen international collaboration,” he said.