South Africa and Nigeria Poised for Financial Milestone With Expected Exit From FATF Grey List
In a development that signals a potential turning point for African economies, both South Africa and Nigeria are positioned for removal from the Financial Action Task Force’s (FATF) international “grey list” as early as next month. This anticipated decision follows nearly two years of intensive reforms by both nations to strengthen their anti-money laundering and counter-terrorist financing regimes, addressing critical deficiencies identified by the global financial watchdog.
The FATF, an intergovernmental organization that sets standards for combating financial crime, is expected to make the formal announcement during its plenary session in October 2025. A positive outcome would mark a significant victory for the two largest economies in Africa, potentially unlocking foreign investment, reducing transactional friction, and restoring international confidence in their financial systems. For continuous updates on this and other major financial stories, the team at African News Desk provides dedicated coverage of South Africa’s economic landscape.
The Long Road to Compliance and Reform
South Africa’s journey to this point began in February 2023, when it was added to the FATF’s list of jurisdictions under increased monitoring, commonly known as the “grey list.” The designation came after the task force identified strategic deficiencies in the country’s ability to combat money laundering and the financing of terrorism. Similarly, Nigeria had been on the list since earlier, facing parallel challenges related to the transparency of legal persons and arrangements.
Being grey-listed is more than a mere reputational stain; it carries tangible economic consequences. It subjects a country’s financial institutions to enhanced due diligence by international counterparts, increasing the cost and complexity of cross-border transactions, trade finance, and correspondent banking relationships. This can deter foreign investment and stifle economic growth.
“The expected delisting of both South Africa and Nigeria is a testament to the substantial and rapid-fire reforms they have undertaken. It sends a powerful signal to global investors about the continent’s commitment to cleaning up its financial systems,” a source familiar with the FATF’s assessment process was quoted as saying in the original report.
In response, both nations embarked on aggressive action plans. South Africa moved to strengthen its regulatory framework, significantly improving its investigation and prosecution of financial crime and enhancing the capabilities of its Financial Intelligence Centre (FIC). Key legislation was amended, and law enforcement agencies were provided with additional resources to pursue complex financial cases. The country also focused on ensuring its legal professionals and other designated non-financial businesses and professions (DNFBPs) complied with robust risk-based supervision.
According to the Bloomberg report, the progress has been noted and appreciated by international monitors. The upcoming FATF plenary, scheduled for late October, is expected to review the final reports and formally vote on the delisting, with officials from both Johannesburg and Abuja expressing cautious optimism about the outcome.
Economic Implications and a New Chapter for African Finance
The potential exit from the grey list is poised to deliver a substantial boost to investor confidence in both South Africa and Nigeria. For international fund managers and corporations, a clean bill of health from the FATF reduces perceived country risk and simplifies the compliance burden associated with investing. This could pave the way for increased foreign direct investment (FDI), which is crucial for stimulating economic growth and addressing high unemployment rates, particularly in South Africa.
The banking sector stands to benefit immediately. South African banks with international operations, such as Standard Bank and FirstRand, have faced heightened scrutiny from their global correspondents. Removal from the list would ease these pressures, potentially lowering compliance costs and streamlining international transactions for businesses and individuals alike. This is critical for fostering a more conducive environment for international trade and capital flows.
“This isn’t just about ticking boxes for an international body. The reforms we’ve implemented have fundamentally strengthened our financial system’s integrity. It makes South Africa a safer and more attractive destination for global capital, which is essential for our long-term economic growth and stability,” commented a senior official from National Treasury.
Beyond the immediate financial benefits, this achievement holds profound symbolic weight. It demonstrates that major African economies can and will align with global standards of governance and financial transparency. This success could serve as a blueprint for other nations on the continent facing similar challenges, promoting a continent-wide uplift in financial integrity and anti-corruption efforts.
The fight against illicit financial flows is a cornerstone of sustainable development. By proving their commitment to this fight, South Africa and Nigeria are not only cleaning up their own systems but also contributing to global security by making it harder for criminal and terrorist networks to move and hide their funds. The enhanced regulatory frameworks now in place will provide a lasting defense against the threats of corruption and complex financial crimes.
While the expected delisting is a cause for optimism, experts caution that the work is not over. Maintaining the reforms and ensuring that the strengthened institutions remain effective is an ongoing challenge. The FATF will continue to monitor both countries even after their exit from the grey list, and any backsliding could risk future scrutiny. However, the concerted effort displayed over the past two years suggests a sustained commitment from both the public and private sectors.
As the October plenary approaches, the financial communities in both nations are watching with bated breath. A positive outcome would mark the end of a challenging chapter and the beginning of a new one defined by greater financial integrity, renewed investor trust, and enhanced prospects for economic prosperity. The anticipated move is a clear win for international cooperation and a testament to what can be achieved through determined policy action and regulatory fortitude.
