SOCIAL DEVELOPMENT TO HOST MULTI-STAKEHOLDER ENGAGEMENT ON IMPLEMENTATION OF RECOMMENDATION 8 OF THE FINANCIAL ACTION TASK FORCE

• The Department of Social Development will be hosting a multi-stakeholder meeting on implementing the final recommendations of the Financial Action Task Force (FATF) from Monday, 3 March 2025.
• This follows the G20 finance ministers and central bank governors meeting last week, where they confirmed their support for the work of the FATF in combatting money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction.
• The multi-stakeholder engagement will focus on Recommendation 8, which aims to protect NPOs from potential terrorist financing and money laundering abuse through the effective implementation of risk-based measures.

As part of South Africa’s ongoing measures to be removed from the Financial Action Task Force’s (FATF) grey-list, the Department of Social Development will host a three-day multi-stakeholder engagement in Kempton Park, Ekurhuleni, from 3 – 5 March 2025.

The team will be looking at implementing the recommendations of the FATF, with South Africa due to report back to the task force on the outstanding issues in the fifth-round mutual evaluation in June this year.

The meeting comes on the back of the G20 finance ministers and central bank governors held in Cape Town on 26 and 27 February 2025, where the members reiterated their support for the FATF’s work.

The Department of Social Development’s multi-stakeholder engagement will bring together government, non-profit organisations (NPOs), development agencies, donors, the private sector, law enforcement agencies, and financial institutions.

The fight against money laundering and terrorist financing requires a collective national effort.

The group will be focusing in particular on Recommendation 8, which aims to protect NPOs from potential terrorist financing and money laundering abuse through the effective implementation of risk-based measures. 

The engagement is to enhance all the role players’ understanding and requirements of the FATF’s standards to combat money laundering and terror financing and to highlight what is required for the implementation of effective national measures to mitigate the risks. 

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.

Case studies, presentations and best practices

As the registrar and custodian of the Non-Profit Organisations Act, one of the Department of Social Development’s strategic goals is the promotion of strategic partnerships with NPOs to deliver services to communities.

The formal programme will feature presentations, case studies, and emerging best practices by experts from key financial institutions and regulators, including the Financial Intelligence Centre, the South African Revenue Service, the Chartered Institute for Business Accountants, and the National Lotteries Commission.

The Companies and Intellectual Property Commission will highlight trends and provide an overview of national measures to combat money laundering and terror financing, as well as the important role NPOs can play.

The multi-stakeholder engagement builds on measures already underway as South Africa works around the clock to finalise outstanding action items from FATF’s recommendations.

South Africa has already addressed, or largely addressed, 20 of the 22 action items in its action plan, leaving two items to be addressed in the next reporting period from March 2025 to June 2025.

This would allow South Africa to be considered for delisting from the FATF grey list in October 2025.

This gathering comes as the department has embarked on deregistering non-compliant NPOs, with 203 279 organisations at risk of being deregistered for failing to submit annual reports as required by section 18 (1) of the NPO Act.

The multi-stakeholder engagement will culminate with the adoption of a declaration on combating money laundering and terror financing in South Africa.

G20 finance ministers and central bank governors meeting

This will echo the international response to combatting money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction, as highlighted in the G20 meeting last week.

There, members reiterated the importance of stepping up global efforts to effectively implement the FATF’s revised standards on the transparency of beneficial ownership of legal persons and arrangements, as well as on asset recovery and international cooperation, to prevent criminals from hiding the proceeds of crime and to facilitate the return of these illicit financial flows and illicit proceeds.

This was highlighted in the chairperson’s summary of the Cape Town meeting.

The supported ongoing work to revise the FATF’s standards on payment transparency as well as the implementation of its standards on virtual assets, the chairperson’s report stated.

“[Members] welcomed the FATF’s commitment to ensure financial integrity without compromising financial inclusion, by promoting risk-based implementation of the FATF Standards. [They also] supported the FATF’s ongoing work to support low-capacity countries in the implementation of AML/CFT/CPF [Anti-Money Laundering/Combating the Financing of Terrorism/Countering Proliferation Financing] Standards.”

Global financial inclusion

On global financial inclusion, the meeting noted progress made but reiterated the need to “swiftly integrate the remaining 1.5 billion unbanked individuals into the formal financial sector”.

“Focusing on SDG [Sustainable Development Goals] target populations remains an important objective, despite the progress made in financial inclusion.

“[Members] acknowledged the need to intensify efforts to expand the effective usage of financial services and products, particularly in developing countries. The Global Partnership for Financial Inclusion will discuss a comprehensive diagnostic study, including policy recommendations on “Moving from Access to Usage” of financial services and products.

“[Members also] supported implementing the G20’s 2023 Financial Inclusion Action Plan and ongoing efforts to lower remittance costs,” the summary stated.

·   Additional reporting by SANews.