Masegomotso Ramalosa, Consultant at Sygnia Umbrella Retirement Fund

In case you missed it (or were hoping it would quietly go away), South Africa was greylisted by the Financial Action Task Force (FATF) on 24 February 2023, after the global financial watchdog found our anti-money laundering (AML) and counter-terrorist financing (CTF) framework to be inadequate.

South Africa was thankfully not slapped with sanctions, but there has been a dip in international investment, a tightening of regulations, a spike in compliance costs, and accordingly, much more admin.

What this means in the umbrella retirement fund space

While group employee benefits consultants in the Sygnia Umbrella Retirement Fund have always taken compliance seriously, our attention to compliance with the Financial Intelligence Centre Act (FICA) has gone from “serious” to “borderline obsessive”.

Everyone has had to revisit their FICA compliance processes, and we found ourselves triple-checking that every participating employer was in proper compliance with FICA – and not just when they joined, but all the way through their membership. Tedious, but very necessary.

Retirement funds and money laundering? Really?

Illicit funds are laundered through a retirement fund when a shell company is set up with “employees” (family, friends or ghosts) who are paid inflated salaries. Pension contributions flow in, are invested and sit quietly for a few years, then emerge as clean “retirement benefits”. Dirty money, now fully laundered.

If we are not vigilant, the entire retirement fund system can become a silent accomplice to crime.

We all have a role to play

Greylisting is not just the regulator’s problem or the compliance officer’s headache. It is an industry-wide wake-up call that requires us to roll our sleeves up together.

The industry must commit to regular, no-nonsense training for its consultants, trustees, administrators and manco members. AML and CTF awareness must be an ongoing part of fund governance (not just during audit season), and we must ensure that participating employers are in compliance with FICA and that red flags are dealt with timeously, effectively and transparently.

Eyes on October 2025

The FATF will decide in October this year whether South Africa has implemented enough changes to get off the greylist, so every bit of work we do now is important. Remaining on the list will have serious consequences, such as global financial institutions refusing to work with us and compliance processes even stricter than those already in place.

In closing…

While the FATF greylisting has made our jobs a little harder, it has also presented us with an opportunity to show the world that South Africa takes financial crime seriously, and that our retirement fund industry is not just watching from the sidelines.

We’re doing the work. And with a little grit (and a lot of paperwork), we’ll get our country back in the clear.

ENDS