SA Strengthens Efforts to Exit FATF Grey List: Govt Engages NPOs to Enhance Compliance

Deputy Minister of Social Development, Ganief Hendricks, has called upon non-profit organisations (NPOs) and civil society groups to collaborate with the government in achieving this objective.

In a determined bid to exit the Financial Action Task Force (FATF) grey list by the end of the year, South Africa has intensified efforts to align with global anti-money laundering (AML) and counter-terrorist financing (CTF) standards. Deputy Minister of Social Development, Ganief Hendricks, has called upon non-profit organisations (NPOs) and civil society groups to collaborate with the government in achieving this objective.

The call for cooperation was made at the commencement of a three-day multi-stakeholder engagement hosted by the Department of Social Development at the Premier Hotel OR Tambo in Kempton Park. The discussions are centred around FATF Recommendation 8, which seeks to protect NPOs from potential abuse related to money laundering and terrorist financing while ensuring risk-based regulatory measures.

Balancing Regulation and NPO Autonomy

Deputy Minister Hendricks stressed the importance of ensuring that regulations do not stifle the operations of legitimate NPOs, which play a critical role in South Africa’s socio-economic development. He highlighted that the National Development Plan (NDP, Vision 2030) encourages grassroots involvement and active citizenry, warning against overburdening NPOs with excessive regulations.

“The objective of the NPO Act is to create an enabling legislative environment for the sector to thrive and contribute to our national development agenda,” Hendricks stated.

His concerns were echoed by key representatives from Kagiso Trust, Afrika Tikkun, Thuthuka Foundation, The Grail Centre Trust, and the Chartered Institute for Business Accountants (CIBA), all of whom raised apprehensions about excessive regulatory measures that could hinder NPO operations.

Progress on FATF Compliance

Representing the National Treasury, Ismail Momoniat provided an update on South Africa’s progress towards meeting FATF’s recommendations. He noted that while the country has made significant strides in addressing compliance issues, more work remains to be done in enforcing anti-money laundering laws and ensuring administrative penalties for high-risk NPOs that fail to adhere to regulations.

“FATF is not just looking for legislation on paper; it demands proof of enforcement, transparency, and accountability. We need to ensure our national policies go beyond compliance and create a robust system of financial integrity,” Momoniat explained.

According to the latest FATF report, South Africa has partially met the requirements of Recommendation 8. A key requirement includes increasing outreach and education among NPOs to enhance their understanding of global AML and CTF measures. The Department of Social Development, as the regulator of the NPO sector under the NPO Act (Act No. 71 of 1997, as amended by the General Laws Amendment Act 22 of 2022), has been tasked with spearheading these initiatives.

National Survey Identifies Terror Financing Risks

A national survey conducted among 301 registered NPOs, non-profit companies, and public benefit organisations from various databases (Department of Social Development, Companies and Intellectual Property Commission, and South African Revenue Service) revealed medium-level exposure to terrorist financing risks.

Of the surveyed NPOs, 120 were identified as high-risk, with concerns including:

• Facilitation of foreign travel for terrorist activities.
• Operation of multiple bank accounts for illicit financial transactions.
• Serving as conduits for channeling foreign funds to terrorist groups in Africa.
• Supporting terrorism through cash donations and online fundraising platforms.

The survey indicated that South African NPOs may be indirectly exposed to terrorist groups such as the Islamic State and its affiliates in Africa, al-Shabab in East Africa, and Boko Haram in West Africa.

Regulatory Proportionality and the Path Forward

Advocate Peter Smit, Acting Director of the Financial Intelligence Centre, emphasized the need for proportional regulatory measures.

“Not all NPOs pose a high risk. It is crucial for South Africa to demonstrate that the majority of NPOs are compliant and should not be subjected to excessive legal constraints,” he remarked.

As part of FATF’s periodic review process, an onsite visit to South Africa is scheduled for September 2025. This visit will assess the country’s implementation of Recommendation 8 and its overall readiness to exit the grey list.

Lessons from Uganda’s FATF Exit

On the second day of the engagement, discussions will include insights from Uganda, which successfully exited the FATF grey list. National and international experts will share best practices on achieving full compliance and maintaining a secure financial system while fostering an enabling environment for NPOs.

South Africa’s Action Plan consists of 22 key items addressing eight strategic deficiencies in its AML/CTF framework. With continued cooperation between the government, NPO sector, and international partners, the country is aiming to demonstrate significant progress and regain full financial credibility on the global stage.