SOUTH AFRICA ADVANCES EFFORTS TO EXIT FATF GREY-LIST AT MULTI-STAKEHOLDER SYMPOSIUM

By Precious Mupenzi

• Significant progress has been made in tackling Recommendation 8 of the Financial Action Task Force relating to strengthening South Africa’s non-profit sector’s resilience against financial crimes.
• A three-day symposium held in response to meeting the requirements of Recommendation 8 focused on government non-profit organisation (NPO) regulators, the NPO sector, and funders/donors.
• Four major areas were highlighted during the discussions: risk mitigation; monitoring and supervision; education and awareness; and fostering long-term collaboration.

Delegates at a three-day symposium on the Financial Action Task Force’s (FATF) Recommendation 8 have reaffirmed South Africa’s commitment to strengthening the non-profit sector’s resilience against financial crimes.

The FATF Recommendation 8 focuses on non-profit organisations (NPOs) and the potential use of NPOs as vehicles for money laundering and terror financing.

Discussions emphasised the need for greater collaboration, improved regulatory frameworks, and enhanced education and awareness to combat money laundering and terrorist financing risks.

The symposium, which brought together government regulators, NPOs, donors, and financial institutions, was held against the backdrop of South Africa’s ongoing efforts to exit the FATF grey-list by October 2025.

Since its grey-listing in February 2023, South Africa has made notable progress, addressing 20 out of 22 action items on its FATF action plan

The outstanding recommendations, which must be resolved by June 2025, focus on investigating complex financial crimes, enforcing effective sanctions, and ensuring access to beneficial ownership information.

Issues raised during commissions

The symposium’s commissions, which focused on government NPO regulators, the NPO sector, and funders/donors, highlighted four major areas: risk mitigation, monitoring and supervision, education and awareness, and fostering long-term collaboration.

Delegates stressed the need for more robust outreach efforts to help NPOs navigate compliance requirements.

“Regulators must provide clear guidelines to ensure organisations can meet their obligations without undue administrative burdens,” one of the participants said.

The call for standardised reporting templates was widely supported as a measure to enhance transparency while reducing bureaucratic constraints.

Monitoring and supervision emerged as an essential theme, with discussions centring on balancing oversight with the sector’s sustainability.

“Effective monitoring must differentiate levels of oversight based on risk assessments rather than imposing a one-size-fits-all approach,” one attendee suggested.

Others stressed the importance of aligning supervision measures with identified terrorist financing vulnerabilities, fostering collaboration between regulatory bodies and financial institutions, and ensuring that unregistered NPOs comply with existing laws.

“Whether registered or not, all NPOs must adhere to the regulations. The challenge is how to track and mitigate risks associated with unregistered entities,” a regulatory official noted.

There were also calls for Corporate Social Investment transparency and standardisation, with the Department of Social Development, the South African Revenue Service, and the NPO sector working together to establish clear guidelines.

Education and awareness were identified as crucial tools in preventing money laundering and terror financing.

Delegates called for coordinated awareness campaigns, increased training initiatives, and ongoing engagement to safeguard the sector. “A well-informed sector is less vulnerable to exploitation,” one participant emphasised.

To ensure sustained compliance and collaboration, delegates proposed establishing a biannual multi-stakeholder forum and strengthening intersectoral coordination mechanisms.

“We must maintain a continuous dialogue beyond this symposium to ensure our collective efforts remain impactful,” a delegate stated.

Stakeholder insights

Nonkululeko Mtambo of Kagiso Trust described the symposium as “revelatory”, highlighting the gaps and opportunities within the NPO sector.

“These discussions are crucial as South Africa works towards understanding its NPO sector while addressing the challenges of grey-listing,” she said. Mtambo emphasised that while compliance with the FATF standards is necessary, these measures also strengthen the economy and global engagement.

Zen Teitge from Manger Care Centre praised the symposium for its informative sessions and insights into stakeholder collaboration.

“Self-regulation is key, and learning to work together with the government, private sector, and NPOs is essential,” he noted. He also welcomed the Department of Social Development’s new online system, which he believes will streamline reporting for organisations.

Way forward

Acting Deputy Director General: Community Development Mpho Mngxitama emphasised the importance of working together: “Strengthening multi-stakeholder collaboration is crucial in advancing measures to combat money laundering and terrorist financing within the NPO sector.”

She noted that this presents an opportunity to build partnerships within the NPO sector and beyond, as addressing sectoral challenges requires collective wisdom and shared responsibility.

Mngxitama highlighted the need for a joint commitment to developing systems and mechanisms that ensure regulatory coherence, balance information privacy with transparency, and shift oversight from an organisation-focused to an activity-based approach.

She stressed the importance of expanding education and outreach through training, handbooks, and other tools while advocating for the establishment of an independent NPO directorate within the Department of Social Development to enhance regulatory oversight.

In addition, she called for reforms in inter-governmental funding policies to harmonise funding practices and emphasised self-regulation as key to the sector’s growth. 

Mngxitama outlined concrete actions to move forward, including hosting a stakeholder webinar to introduce the new system, rolling out a national awareness campaign, and extending collaboration with private funders, donors, and the banking sector.

She also announced plans to develop a Best Practice Paper for South Africa in consultation with stakeholders, establish a core team representing different sectors to drive the action plan, and hold regular engagements with the sector to monitor progress.

“These steps will ensure a more effective and coordinated approach in addressing the challenges facing the NPO sector while fostering compliance and collaboration,” she concluded.