Greylisting can be prevented – Treasury HOD Momoniat

Ismail Momoniat, the acting head of the National Treasury, is optimistic that South Africa can avoid being greylisted by the worldwide Financial Action Task Force (FATF).
Momoniat discussed the probable greylisting during a Daily Maverick webcast on Wednesday afternoon.
The FATF aims to combat money laundering, and South Africa’s greylisting would not only hinder its capacity to attract foreign investment but also undermine investor confidence.
In October of last year, the organization produced an evaluation report that awarded South Africa a negative rating and outlined 40 recommendations and other actions that would prevent greylisting.
“I continue to be confident that there is a way to prevent greylisting. It may not be likely, but I believe there is a way forward. There are bills pending in the House and Senate, and both are at an advanced level in the National Assembly.
“By February, we will be able to demonstrate substantial compliance with 20 of the 40 suggestions. The rules themselves address approximately 16 of the 20 and then demand additional regulations and measures, but we’d get compliance by technology means,” he said.
The chief of the Treasury, however, cautioned that while South Africa may meet the technical compliance criteria, “we lack in effectiveness.”
“This is a widespread South African issue…all it’s about implementation, which is where we fall short. However, I am still fairly optimistic. There are three or four immediate outcome measures relating to prosecutions, investigations, and forfeitures. “Compared to 2019, I would suggest that our organizations were at their weakest. They were emerging from State Capture, had recently appointed a new leader, and had few cases to present. Now, despite the slow pace, there has been consistency, and the number of cases is increasing.
Therefore, we would be able to demonstrate that we have made tremendous progress. Certainly, we still need to make a great deal more progress, but if we can demonstrate dedication to each of the criteria, we will have made progress,” he said.
Momoniat stated that in the event of greylisting, the government’s efforts to comply with FATF recommendations and measures will mitigate the impact.
“To the extent that we’re greylisted, but we’ve demonstrated that we’ve changed the laws and made progress on five or six of the measures, it will be a very different message that South Africa has made progress; it just needs a little more time, and the impact will be less.
“I certainly hope that on the financial sector side, with correspondent banks and the such, we will have passed the test,” he remarked.
The chairman of the South African Treasury stated that the FATF’s examination has intensified efforts at all levels to prevent greylisting.
In a sense, the effect of [potential] greylisting has been to focus minds and ensure that our criminal justice system begins to function more effectively when dealing with financial crimes.
We informed them of the economic ramifications of acting too slowly. They have realized that their own performance is, in a sense, being observed and have begun to clean up their act. Certainly, they are aware of the situation.
“Even with the other authorities we work with on terror financing, they’re beginning to do things they weren’t doing before, and there’s a strong emphasis on this. There will always be difficult obstacles, but I believe we can demonstrate significant progress,” he said.