One Year Off the FATF Grey List: South Africa’s Next Test Has Already Started

On 24 October 2025, South Africa came off the FATF grey list after 32 months under increased monitoring by the Financial Action Task Force. The relief across the financial sector was real, and so were the benefits that followed. But a year on, it is worth being clear about what the delisting was, and what it was not.

It was proof that South Africa fixed a specific list of problems. It was not a clean bill of health. That test is coming next, and in our 25+ years supporting compliance teams across South Africa and global markets, we have seen how quickly a “we passed” mindset turns into an expensive surprise.

Key Takeaways

• South Africa left the FATF grey list on 24 October 2025, after 32 months under increased monitoring.
• The next test is a full FATF mutual evaluation, with an on-site visit indicated for around February 2027 and the report due at the October 2027 plenary.
• Effectiveness is the hard part. Assessors will look for evidence that the system works in practice, not just that the right laws exist.
• Supervisors are already raising the bar on beneficial ownership, annual RMCP submissions and penalties.

What the FATF Grey List Exit Delivered

The road off the grey list was a narrow, defined one. South Africa was given an action plan of 22 items, and in June 2025 the FATF confirmed they had been substantially completed. An on-site visit by FATF assessors in late July 2025 checked that the reforms were real and sustainable, and the October 2025 plenary in Paris made the decision official.

The knock-on effects arrived quickly. In January 2026, the European Union removed South Africa from its list of high-risk third countries, with effect from 29 January 2026. That ended the requirement for EU institutions to apply enhanced due diligence to transactions involving South African entities, easing friction for local businesses dealing with Europe.

Those are genuine wins. They were earned through reforms to the Financial Intelligence Centre Act, stronger beneficial ownership transparency, tighter reporting obligations and improved enforcement capacity. We covered what the exit meant at the time in A Step Forward for South Africa.

The Next Test: A Full FATF Mutual Evaluation

South Africa is now in the FATF’s new round of mutual evaluations. The FATF’s own assessment calendar points to an on-site visit around February 2027, with the final report discussed at the October 2027 plenary. Those dates are indicative, but the preparation window is already open.

A FATF mutual evaluation is a very different exercise from a grey list action plan. Instead of checking a fixed list of fixes, assessors look at the entire anti-money laundering and counter-terrorist financing system, on two levels:

• Technical compliance: do the laws, regulations and institutional frameworks meet the FATF’s 40 Recommendations?
• Effectiveness: does the system actually work in practice? Are risks understood, are suspicious transactions reported and used, are beneficial owners known, and are criminals prosecuted and their assets recovered?

Effectiveness is where countries tend to struggle, because it cannot be fixed by passing a law. It has to be shown with evidence. National Treasury has been candid on this point, noting that significant work remains in the prevention, identification, investigation and prosecution of money laundering and terrorist financing.

Supervisors Are Already Raising the Bar

You do not have to wait until 2027 to see where scrutiny is heading. The signals are already visible in 2026:

• Beneficial ownership is a top inspection priority. Knowing who ultimately owns and controls a client is now a central focus for supervisors, and collecting a name is no longer enough. It has to be verified.
• RMCPs now go to the FIC every year. Under Directive 12, affected accountable institutions must submit their Risk Management and Compliance Programme to the Financial Intelligence Centre annually, with the first deadlines in October 2026.
• Penalties are being applied. The FSCA recently imposed a R16 million administrative penalty on a fund manager for shortcomings in its FIC Act compliance responsibilities.

The message is consistent. Regulators want to see compliance that works, and they want proof.

Five Ways to Prepare Now

Every accountable institution’s activity feeds into the national picture assessors will examine. Here is where we would focus.

1. Treat every decision as evidence. Effectiveness is judged on what you can show. Every screening result, risk rating, escalation and closure should be recorded with a clear rationale and an audit trail a third party can follow.

2. Verify beneficial ownership, do not just collect it. Map ownership structures to the natural persons behind them, screen those individuals, and keep the picture current when directors and shareholders change.

3. Make your RMCP a living document. With annual submissions now required, your RMCP should reflect how your business actually operates today. A quick FICA compliance assessment is a useful way to find gaps before the FIC does.

4. Screen continuously, not only at onboarding. A client who was clean last year may not be clean today. Continuous monitoring of sanctions, PEP and adverse media exposure means risk changes are caught when they happen, not at the next review.

5. Go deeper where the risk is higher. High-risk clients and complex structures need enhanced due diligence that is thorough, consistent and documented, so the same case produces the same answer no matter which analyst handles it.

From Pass or Fail to a Report Card

The FATF grey list was, in effect, a pass or fail. The next mutual evaluation is a detailed report card, and it will shape how the world views South Africa’s financial system for years to come. A poor effectiveness rating could put the country back under scrutiny and bring back the costs that came with it.

The good news is that the institutions that prepare now will not just help the national result. They will run stronger, more defensible compliance programmes in the meantime.

Frequently Asked Questions

When did South Africa leave the FATF grey list?

South Africa was removed from the FATF grey list on 24 October 2025, at the end of the FATF plenary in Paris. It had been under increased monitoring since February 2023, a period of 32 months.

What is a FATF mutual evaluation?

A FATF mutual evaluation is a peer review of a country’s entire anti-money laundering and counter-terrorist financing system. It assesses technical compliance with the FATF’s 40 Recommendations and how effectively the system works in practice.

When is South Africa’s next FATF mutual evaluation?

The FATF’s assessment calendar indicates an on-site visit around February 2027, with the final report discussed at the October 2027 plenary. These dates are indicative and may change.

Could South Africa be placed back on the grey list?

It is possible. Countries whose mutual evaluation reveals significant deficiencies can be placed under increased monitoring again, which is why preparation for the next evaluation matters.

HLBNGA helps compliance teams screen, monitor and evidence every decision, from onboarding through to ongoing monitoring. Talk to us about getting your programme evaluation-ready.