South Africa has achieved a significant milestone in restoring its international financial standing with the Financial Action Task Force (FATF) officially removing the country from its list of Jurisdictions under Increased Monitoring, commonly known as the “grey list.” This development marks the end of a challenging period that severely impacted the nation’s non-profit sector and broader economy.
The removal comes after South Africa successfully addressed all 22 deficiencies identified by the FATF, demonstrating the country’s commitment to strengthening its financial systems and combating money laundering and terrorist financing risks.
The delisting brings particular relief to South Africa’s Non-Profit Organisations (NPOs) and Civil Society Organisations (CSOs), which bore the brunt of the grey listing’s impact. Feryal Domingo, Acting Executive Director for Inyathelo, The South African Institute for Advancement, emphasised the significance of this achievement.
“This significant milestone is particularly crucial for the Non-Profit Organisation (NPO) sector, which relies heavily on trust, reputation, and unfettered access to both local and international funding channels,” Domingo explained.
During the grey listing period, NPOs faced unprecedented challenges that threatened their very existence and ability to serve communities across South Africa.
The grey listing introduced immediate and severe obstacles for South Africa’s civil society sector. Domingo detailed the concerning effects that organizations experienced under increased regulatory scrutiny.
“We had noted several concerning and even disturbing effects of the increased regulatory scrutiny. These included a reduced ability to fundraise for legitimate causes, significant reputational damage to the sector as a whole and financial institutions imposing burdensome due diligence requirements or, in some cases, closing NPO bank accounts,” said Domingo.
These challenges not only affected individual organisations but also undermined the sector’s collective ability to address critical social issues and support vulnerable communities.
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The grey listing’s impact extended far beyond the non-profit sector, affecting South Africa’s broader economic landscape. International pension and investment funds were prohibited from investing in the country while it remained on the list, restricting vital capital flows that support both NPOs and Higher Education institutions.
The removal is expected to restore investor confidence and contribute to efforts aimed at attracting investment and stimulating economic growth. This renewed confidence will create a more favorable funding environment for the entire non-profit sector.
However, Domingo sais that the work is far from over. The country must maintain momentum to ensure it remains off the grey list permanently.
“We must however not lose momentum and continue our efforts to stay off the grey list. Now more than ever, South Africa should focus on addressing Recommendation 8, which is concerned with protecting NPOs from being misused for terrorist financing, requiring countries to review their NPO laws and implement risk-based, proportionate measures to protect vulnerable organisations without disrupting legitimate activities,” she stated.
The successful delisting represents more than just regulatory compliance; it symbolizes a victory for South Africa’s democratic values and social justice initiatives. Domingo celebrated this achievement as validation of the thousands of NPOs working across the country.
“This is a victory for the thousands of NPOs whose work is vital to our democracy and social justice. The global community can now confidently re-engage with our non-profit sector, knowing that we have robust systems in place to promote transparency and accountability,” said Domingo.
With the grey listing stigma removed, South Africa’s advancement sector can now operate with renewed confidence and vigor. Inyathelo remains committed to ensuring that NPOs understand and implement necessary measures for strong governance and compliance, protecting the sector’s integrity and preserving an enabling environment for giving.
As Domingo concluded, “The true work of Advancement, and securing resources for social change, can now proceed with renewed vigour, unburdened by the stigma of increased financial risk.”
