South Africa has completed all intergovernmental organisation Financial Action Task Force (FATF) requirements and is on track to exit its grey list in October, following a comprehensive overhaul of anti-money-laundering frameworks that reversed damage from the State capture era, says business organisation Business Leadership South Africa CEO Busi Mavuso.

The completion of all FATF requirements is a significant achievement for the economy, she adds, pointing out that, to reach this goal, the National Treasury had to orchestrate a complex, multi-agency effort that has fundamentally strengthened South Africa anti-money laundering and counter-terrorism financing frameworks.

The final hurdle to exit the grey list, namely demonstrating sustained improvements in investigation and prosecution capabilities, required rebuilding capacity across the entire criminal justice system, from police units to the National Prosecuting Authority (NPA), she adds.

“We now have a clear trajectory toward exiting the FATF grey list in October, pending the required on-the-ground peer review.”

Grey listing has imposed crushing costs on South Africa's economy. International financial institutions must apply enhanced due diligence to every South African transaction, which is a burden many simply avoid by severing relationships with South African companies entirely, says Mavuso.

However, the improvements achieved since February 2023 extend beyond the country's FATF compliance, as South Africa now has comprehensive beneficial ownership registers for companies and trusts.

The Financial Intelligence Centre’s data reserves are also being leveraged by investigators to build cases that can successfully be prosecuted. South Africa's law enforcement agencies have been integrated into global networks combating transnational crime, she highlights.

“Critical steps remain before October’s official exit, but prospects are now excellent. Removing this economic headwind will provide crucial momentum for growth,” she emphasises.

Grey listing was State capture’s direct legacy. The systematic gutting of the country's criminal justice system, from crime intelligence to the NPA, created a paradise for white-collar criminals.

Skilled investigators were purged, replaced by political appointees whose job was protection, not prosecution. The probability of facing consequences for economic crimes became negligible, Mavuso states.

The collapse of the rule of law devastates economic growth. Contracts become unenforceable. Businesses shoulder massive fraud and corruption costs. Criminal syndicates flourish, spawning extortion networks that strangle legitimate enterprise, she adds.

“National Treasury’s remediation process has begun reversing this institutional decay, with important economic implications,” she emphasises.

Meanwhile, the current 10% tariff on South African goods by the US expires on July 9, and will then revert to a 30% tariff unless South Africa can secure an extension for the lower tariffs.

Manufacturing and agriculture, which drive employment, may be hardest hit by this. Raw material exports remain exempt from tariffs, but value-added activities that create jobs face significant disruption under the 30% tariffs.

“We cannot afford to lose these employment-intensive industries,” Mavuso says.

Additionally, China’s recent announcement of duty-free access for all African nations with which it has diplomatic ties will not have gone unnoticed in Washington.

“We may be witnessing a fundamental shift in Africa’s global orientation,” she says.