South Africa is closer to getting off the Financial Action Task Force (FATF) grey list, but there is still more to do, says the Financial Intelligence Centre (FIC).
In a statement released last month, the FIC said that the non-financial businesses it monitors have made significant strides in understanding and reporting on their risk positions when it comes to money laundering and terrorist financing.
However, there is still progress to be made, and the FIC has called out the estate agency sector as one whose performance has been unsatisfactory (along with legal practitioners). According to their statement, around 70% of estate agencies have submitted Risk and Compliance Returns (RCRs) – only a small improvement on the 66% who had done so last August, despite the threat of sanctions.
According to Christopher Malan, Executive Manager: Compliance & Prevention at the FIC, “RCR submission rates... must move closer to the 100 percent mark over the current quarter (April to June 2025) for the FIC to improve its risk-classification for each sector.”
Inadequate compliance also means that SA is no longer on the National Treasury’s schedule for exiting the grey list. In response to FATF’s review of SA’s status last June, the Treasury said that the country was on track to solve outstanding issues by February 2025 and could exit the grey list in June of this year.
Exiting the grey list
Being on the grey list means all international transactions into and out of SA are subject to greater scrutiny from other governments around the world, making it more difficult for overseas investors to invest in local property and other SA assets, and for existing investors to receive rental income. It can also result in extra admin for estate and rental agencies working with overseas clients.
For SA to successfully exit the grey list, all estate agencies that have not yet submitted RCRs must do so, along with all other required regulatory reports. Agencies will also have to verify the beneficial ownership of properties they manage, and make sure their internal Risk Management and Compliance Programmes are up to date.
