The South Africa grey-list exit shows the country has adequately satisfied the Financial Action Task Force (FATF) and has improved its controls around anti-money laundering and the combating of the financing of terrorism.
Being grey-listed has meant that it has been harder for foreign investors to do business in the country, given its higher-risk status and therefore enhanced due diligence requirements. Exiting the grey-list should make it cheaper and more efficient to do business here.
This, together with the steps taken to correct various deficiencies and better detect financial crime, as well as the laws implemented to enforce compliance, should make the country a more attractive destination for capital and prove beneficial for the economy as a whole.
The delisting will be viewed positively by international investors and is likely to increase capital flows into the country. That said, the grey-listing is by no means the only obstacle to attracting foreign capital – there is still the global and local economic backdrop to contend with. However, it is a step in the right direction to improving investor confidence alongside other positive developments such as ongoing reform progress, energy stability and public/private sector engagement.
Sustained financial hygiene, coupled with economic stability, is required for ongoing international flows.
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