Written By Money laundering is a real problem on the African continent and it’s taking its toll on the economies of many countries. South Africa and Nigeria are two of the most prominent examples, with both nations now being placed on an international “grey-list” for their failure to meet compliance requirements on anti-money laundering protocols. This blog post will explore what this means for both countries, their economies and their ability to attract foreign investment. We’ll also address how the grey-listing could affect South Africa and Nigeria’s relationships with other countries, as well as what steps they need to take in order to move forward.
Money laundering in South Africa and Nigeria
South Africa and Nigeria have been placed on an international “grey-list” for anti-money laundering. The Financial Action Task Force (FATF), the global money laundering watchdog, has given the two countries until February 2020 to improve their laws and regulations or face possible blacklisting.
South Africa and Nigeria are major transit points for drug trafficking and other criminal activities in Africa. The grey-listing means that banks and other financial institutions will now have to carry out extra due diligence when doing business with customers from these countries. This could make it more difficult and expensive for South African and Nigerian companies to do business internationally.
The FATF is concerned that South Africa and Nigeria have not done enough to prevent money laundering and terrorist financing. In particular, the FATF is worried about the lack of regulation of virtual currencies such as Bitcoin, which are often used by criminals to launder money.
Both South Africa and Nigeria have committed to taking action to improve their anti-money laundering regimes. However, it remains to be seen whether they will be able to meet the FATF’s deadline of February 2020.
The international ‘grey-list’
The international ‘grey-list’ is a list of countries that have been identified as having deficiencies in their anti-money laundering and counter-terrorist financing regimes. South Africa and Nigeria have both been placed on this list by the Financial Action Task Force (FATF), an inter-governmental body that sets standards and promotes effective measures to combat money laundering, terrorist financing and other related threats to the integrity of the international financial system.
Both countries have been given a deadline of October 2019 to make improvements to their respective regimes, or else they will face increased scrutiny from FATF members, which could lead to financial sanctions. In particular, South Africa needs to improve its supervision of banks and non-bank financial institutions, while Nigeria must do more to tackle cross-border money laundering and terrorist financing.
The FATF’s decision to place both countries on its ‘grey-list’ is a wake-up call for them to take action against money laundering and terrorist financing. Failure to do so could have serious consequences for their economies, including making it harder for businesses to operate internationally and limiting access to global financial markets.
The effect of being placed on the list
The effect of being placed on the list is that a country’s financial institutions will be closely monitored by the international community. This can lead to difficulties in accessing international financial markets and increased costs for banks operating in the country. In addition, the reputation of the country may be damaged, which can impact trade and investment.
What is being done to combat money laundering?
In recent years, various international organizations have placed an increased focus on combating money laundering. In particular, the Financial Action Task Force (FATF) is an intergovernmental body that develops and promotes policies to combat money laundering and terrorist financing.
In October 2019, the FATF placed South Africa and Nigeria on its so-called “grey-list” of countries that are not doing enough to combat money laundering. This means that banks and other financial institutions will now be required to carry out additional due diligence when dealing with customers from these countries.
The South African government has responded by saying that it is committed to meeting the FATF’s standards and requirements. It has also announced a number of measures that it is taking to combat money laundering, including:
• Establishing a new Financial Intelligence Centre;
• Amending existing legislation;
• Increasing supervision of the financial sector; and
• Enhancing cooperation with international partners.
It is hoped that these measures will help to improve South Africa’s standing with the FATF and ensure that it is removed from the grey-list in the near future.
Conclusion
The recent decision to place South Africa and Nigeria on the international ‘grey-list’ for anti-money laundering is a clear indication of how seriously governments are taking this issue. This will no doubt have an impact on cross border activities, particularly in terms of financial services and investments. Both countries must now take steps to ensure that they comply with international standards as failure to do so could result in serious consequences both domestically and abroad. In the meantime, it is important that affected individuals remain aware of their situation and keep up to date with any changes or developments in relation to these standards.
