SA Advances Efforts to Exit FATF Grey List Following Multi-Stakeholder Symposium

The symposium, attended by representatives from government, civil society, financial and non-financial regulators, and NPO funding lobby groups, focused on FATF Recommendation 8.

In a significant step toward addressing outstanding action items related to Recommendation 8, the Department of Social Development hosted a three-day multi-stakeholder symposium aimed at strengthening compliance with global financial regulations. The symposium, held under the theme "Together Countering the Financing of Terrorism in the NPO Sector - Promoting Cooperation and Compliance with Global Standards," reaffirmed South Africa's commitment to meeting the Financial Action Task Force's (FATF) standards and securing its removal from the grey list.

Progress and Key Outcomes

Since its grey listing by FATF in February 2023, South Africa has made notable strides in addressing compliance requirements related to money laundering, terrorist financing, and proliferation financing. With only one reporting cycle remaining, National Treasury has emphasized the urgency of demonstrating sustained progress in areas such as investigating and prosecuting complex financial crimes.

The symposium, attended by representatives from government, civil society, financial and non-financial regulators, and NPO funding lobby groups, focused on FATF Recommendation 8. This recommendation examines the potential risks of non-profit organizations (NPOs) being exploited for illicit financial activities. While FATF has noted progress, certain action items under this recommendation remain partly addressed.

To enhance cooperation and compliance, key discussion points and resolutions from the symposium included:

• Risk-Based Approach for NPOs – Recognizing that not all NPOs are at risk of being exploited for money laundering or terrorist financing. A risk-based approach will be applied to high-risk NPOs, in alignment with FATF guidance.
• Data Sharing and Early Detection – Participants emphasized the importance of strengthening data-sharing agreements among government departments, law enforcement agencies, and the private sector to enhance early detection of suspicious financial activities.
• Avoiding Overregulation – While compliance measures are essential, concerns were raised that excessive regulation of NPOs could stifle community activism and discourage citizen participation in social development initiatives.
• Educational and Outreach Programs – Calls were made for the Department of Social Development to expand outreach efforts, working collaboratively with financial oversight bodies such as the Financial Intelligence Centre (FIC), South African Revenue Service (SARS), and National Lotteries Commission (NLC).
• Independent NPO Regulator – The establishment of an independent NPO regulator was proposed, as concerns were raised about the Department of Social Development's dual role as both a funder and regulator of NPOs.
• Sustained Commitment Beyond Grey Listing – Participants pledged ongoing collaboration and improved coordination beyond FATF's requirements to ensure long-term transparency and accountability in the NPO sector.

Declaration and Commitment

The symposium concluded with a declaration signed by all participants, reinforcing their commitment to combat all forms of money laundering and terrorist financing in South Africa. Acting Deputy Director-General for Community Development, Mpho Mngxitama, commended stakeholders for their dedication to ensuring South Africa exits the grey list within record time.

"As FATF's onsite visit approaches, it is now all hands on deck to expedite action on all outstanding items to exit South Africa from the grey list as swiftly as possible," stated the department.

Introduction of NPO Online Solution

In addition to policy discussions, the Department of Social Development introduced the NPO Online Solution, a self-service digital portal designed to streamline the registration and compliance process for NPOs. The platform will allow the public to register new NPOs, track application statuses, submit annual compliance reports, and initiate voluntary deregistration.

A major advancement of the system is its planned integration with the SARS and Companies and Intellectual Property Commission (CIPC) portals, ensuring seamless data coordination and compliance monitoring. Before its nationwide rollout in the next financial year, a pilot webinar will be conducted to familiarize stakeholders with the system's functionalities.

Next Steps

With continued momentum and a collaborative approach, South Africa remains committed to fulfilling its FATF obligations and fostering a transparent, well-regulated NPO sector. The multi-stakeholder symposium marks a pivotal moment in the country's efforts to enhance financial integrity and secure its removal from the grey list.