Bianca Botes, Director at Citadel Global

South Africa’s (SA’s) anticipated delisting from the Financial Action Task Force (FATF) greylist represents a key milestone in the country’s economic and financial trajectory. Compliance with FATF rules around the prevention of financial crime strengthens financial stability and market confidence, which are important forward drivers for SA’s economic resilience, according to Citadel Global.

The FATF greylisting process ensures countries strengthen their anti-money laundering and counter-terrorist financing (AML/CFT) frameworks to protect the global community. SA was greylisted in February 2023 due to gaps in its regulation and policing of these serious cross-border financial crimes.

Greylisting subjects countries to enhanced scrutiny, increasing transaction costs, lengthening payment processing times and raising compliance barriers for international banks dealing with SA entities.

SA’s greylisting fate to be determined on 24 October

Bianca Botes, Director at Citadel Global, explains: “All eyes are on the FATF’s October 2025 Plenary Session, this Friday, when it is expected to announce whether SA will be taken off the greylist. The likelihood appears substantial but not guaranteed, with regulators optimistic that SA has reportedly made substantial progress, having completed all 22 action items by June 2025. An on-site assessment by the FATF Africa Joint Group verified that critical reforms were implemented and that political commitment to sustaining progress remains strong. The findings from this inspection will be reviewed at the 24 October 2025 FATF Plenary, which will determine whether SA meets the criteria for delisting.”

Botes however cautions: “FATF delisting requires meeting stringent criteria, including demonstrating sustained effectiveness over time, not just technical compliance. The October Plenary will assess whether reforms are embedded in practice. While the fundamentals are positive, FATF decisions involve complex political and technical considerations and the organisation typically exercises caution before removing countries from enhanced monitoring.”

Why delisting from the FATF’s greylist is so critical

“Delisting represents far more than regulatory compliance – it’s a credibility signal to global markets,” notes Botes.

Botes says several immediate business environment improvements would follow a delisting. This would include 8 important benefits for the financial ecosystem:

1. Reduced transaction costs and faster payments are expected as international wire transfer fees could decline and processing times for routine international transactions shorten.
2. Lower international trade finance and credit costs will result as letters of credit and trade finance pricing normalise, removing the “greylisting premium” and making trade-related borrowing more affordable.
3. Enhanced access for small and medium enterprises (SMEs) to global finance, with less stringent due diligence requirements and improved availability of finance, which had become prohibitively expensive or largely unavailable during greylisting.
4. Restored financial connectivity and correspondent relationships will see international banks re-establish connections previously restricted during greylisting, reopening vital payment corridors and enabling SA banks to diversify partnerships with major United States (US) and European institutions.
5. Enhanced capital inflows and foreign investment are expected as lower compliance costs make SA more attractive for multinationals establishing regional headquarters or expanding operations, driving increased foreign direct investment.
6. Renewed portfolio and bond market confidence will follow as governance-related restrictions applied to greylisted countries are removed, potentially triggering passive fund inflows and improving pricing and access for both sovereign and corporate international bond issuance.
7. Revitalised private equity and pension fund investment will allow private equity firms to face fewer barriers when allocating capital to SA, while large global institutional investors can remove the country from restricted investment lists, expanding access to long-term funding.
8. Strengthened regional financial hub positioning will reinforce SA’s competitiveness as a financial centre, improving its standing relative to Mauritius, Kenya and the United Arab Emirates.

“If SA succeeds in being removed from the greylist, it will restore faith in the current SA government’s ability to coordinate complex multi-agency reforms, deliver on international commitments and prove that its institutional capabilities can inspire confidence beyond financial regulation. It ultimately shows a political commitment to maintaining international standards despite domestic pressures and this will be very good for SA’s standing in the global financial markets,” says Botes.

“Ultimately, achieving delisting signals that SA is committed to maintaining robust financial standards and is a credible and attractive destination for both domestic and international investment. What will be important in the future is to keep demonstrating that SA is serious about the independence of its institutions, the prevention of state capture, the prosecution of financial crimes, including corruption and the continued modernisation of its financial systems and regulatory compliance capabilities,” she explains.

A final word on the potential impact of a delisting on the value of the rand

Botes, who is a currency expert, says: “While we might see an initial sharp move in the rand upon announcement, the direct currency impact is likely modest. Currency markets price in multiple factors, including interest rate differentials, terms of trade, political stability and global risk sentiment. However, delisting could have indirect positive effects on portfolio flow normalisation, thanks to reduced compliance friction, risk premium compression, due to lower perceived institutional risk and general investment confidence signals.”

“The foreign exchange environment will benefit more from the structural improvements underlying delisting, including stronger financial oversight, enhanced regulatory capacity and improved governance, than from the delisting announcement itself,” she concludes.

ENDS