Sub-Saharan Africa’s two largest economies, South Africa and Nigeria, have been removed from the Financial Action Task Force (FATF)’s list of countries subject to enhanced monitoring for illicit financial flows.
The Paris-based watchdog announced the decision at the conclusion of its plenary meeting on Friday, also delisting Mozambique and Burkina Faso from its grey list, according to Reuters
South Africa and Nigeria were added to the FATF’s list in 2023, Mozambique in 2022, and Burkina Faso in 2021.
The FATF credited South Africa with sharpening tools to detect money laundering and terrorist financing, Nigeria with improving inter-agency coordination, Mozambique with enhancing financial intelligence sharing, and Burkina Faso with strengthening oversight of financial institutions and gatekeepers.
“With each plenary we seek to make the world’s defence against criminals stronger, and we have made a number of updates on our grey list,” said Elisa de Anda Madrazo, president of the FATF, during a press conference. “And this plenary has been very positive, a positive story for the continent of Africa,” she added.
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The South African government described FATF’s decision as a major achievement while noting that further work is still required to reinforce key institutions. Nigeria said the delisting would reinforce confidence in its economy.
Analysts say removal from the grey list could make it easier for capital to flow into these four African countries, benefiting companies and households by potentially lowering funding costs. The International Monetary Fund (IMF) has estimated that being on the list reduces foreign capital inflows by around 7.6% of GDP.
“Corporates and individuals will face less friction in cross-border payments once key jurisdictions mirror the FATF decision,” said Vincent Gaudel, a financial crime compliance expert at LexisNexis Risk Solutions. “Banks will expand correspondent services, and trade-finance operations will run more smoothly.”
For South Africa, Bastian Teichgreeber, chief investment officer at Prescient Investment Management, said, “The delisting provides a modest tailwind for sentiment and risk premia.”
The FATF also issued an updated statement on Iran, which has remained on its blacklist since 2020, following a period on the grey list. While acknowledging Iran’s recent re-engagement, the watchdog noted that the country has not addressed the majority of its action plan since 2016.
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