DEPUTY MINISTER URGES NPOS TO WORK WITH GOVERNMENT TO GET SOUTH AFRICA OFF GREY-LIST

• Non-profit organisations (NPOs) and civil society are being urged to work with government to help it get off the Financial Action Task Force’s (FAFT) grey-list before the year ends.
• The Department of Social Development has convened a multi-stakeholder engagement to consult the NPO sector on implementing FATF Recommendation 8, which aims to protect NPOs from potential terrorist financing and money laundering abuse.
• Deputy Minister Ganief Hendricks said the government must guard against overburdening and frustrating grassroots initiatives through the use of legislation.

As South Africa works around the clock to exit the Financial Action Task Force’s (FATF) grey-list before the end of this year, Deputy Minister of Social Development Ganief Hendricks has urged non-profit organisations (NPOs) and civil society to work with the government to achieve this.

Hendricks was speaking on 3 March 2025 on the first of the three-day multi-stakeholder engagement convened by the Department of Social Development to consult the sector on implementing FATF Recommendation 8, which aims to protect NPOs from potential terrorist financing and money laundering abuse.

The FATF is an international organisation that monitors global money laundering and the financing of terrorism, setting standards to prevent illegal activities and the harmful impact they cause.

In his address, Hendricks cautioned government against using legislation to stifle operations of legitimate NPOs that play a vital role in communities across South Africa.

“Our National Development Plan (Vision 2030) calls for active citizenry, especially from the grassroots level.

“We must therefore guard against overburdening and frustrating grassroots initiatives through the use of legislation. The objective of the Non-Profit Organisation Act is to create an enabling legislative environment for the NPO sector to thrive and contribute to our national development agenda,” Hendricks said.

The deputy minister’s sentiments were echoed by representatives from Kagiso Trust, Afrika Tikkun, Thuthuka Foundation, The Grail Centre Trust and the Chartered Institute for Business Accountants, all of which expressed concerns about “over-regulating the NPO sector”.

Speaking on behalf of the National Treasury, which is the lead government department in addressing the FATF’s recommendations, Ismail Momoniat said that while South Africa has made great progress towards exiting the grey-list, more still needs to be done with regard to satisfy fully FATF’s global anti-money laundering and counter-terrorist financing standards.

“FATF is not satisfied with the mere existence of national legislation, but also enforcement of administrative penalties for high-risk NPOs that fail to comply with the provisions of the law,” Momoniat said.

“We need to look beyond FATF’s standards and collectively work towards ensuring a national blueprint on transparency and accountability,” he added.

The latest report from FATF shows that South Africa has partly met the criteria for Recommendation 8.

One of the FATF’s requirements is that the Department of Social Development, as the regulator of the NPO sector in terms of the NPO Act, has to conduct more outreach and educational programmes with NPOs to promote a better understanding of the global anti-money laundering and counter-terrorist financing standards.

To assess the risks of terror financing in the sector, South Africa conducted a national survey with a sample of 301 registered associations, non-profit companies and public benefit organisations from databases of the Department of Social Development, the Companies and Intellectual Property Commission and the South African Revenue Service.

The survey found that NPOs in South Africa were exposed to medium risks from the operations of known terror organisations such as the Islamic State and its affiliates in Africa, al-Shabab and its affiliates in East Africa, and Boko Haram, amongst others.

Of the 301 NPOs surveyed, 120 were identified as high-risk.

The survey found that the nature of risks associated with NPOs in South Africa include, but are not limited to, NPOs facilitating foreign travel for terrorist causes, using multiple bank accounts, being used as conduit to channel foreign funds to terrorist groups in Africa, supporting terrorist causes through, cash and using the internet and online media for fundraising recruitment and propaganda.

The acting director of the Financial Intelligence Centre, Advocate Peter Smit, emphasised that since FATF Recommendation 8 does not apply to all NPOs, it is important for South Africa to show that the majority of NPOs are not high-risk and therefore should not be subjected to restrictive legislative and administrative requirements.

FATF is scheduled to conduct an onsite visit on Recommendation 8 in South Africa in September this year as part of the periodic reporting requirement to exit the grey-list.

Day two of the multi-stakeholder engagement will focus on national and international perspectives and the impact of Recommendation 8 on NPOs, as well as sharing best practices from Uganda, which has successfully been removed from FATF grey-list.