In an exceptionally positive development, the Financial Action Task Force (‘the FATF’) unanimously agreed to remove South Africa from its grey list on Friday afternoon following the Paris Plenary – a move undoubtedly welcomed by the business sector and property industry.
Greylisted in February 2023 after the FATF identified 22 weaknesses in the country’s anti-money laundering and counter terrorist financing framework, South Africa has taken extensive steps to exit the grey list. These measures include amending legislation to better address financial crime, broadening the scope of the Financial Intelligence Centre Act, and earmarking billions of Rands to capacitate crime-fighting agencies.
Although South Africa’s placement on the grey list was unrelated to its stable financial sector, prolonged greylisting can impede capital inflows and foreign direct investment. To that end, the move is particularly welcome for the property industry. STBB Director and real estate expert, James Phillipson, notes that South Africa’s progress enhances its appeal as a credible and attractive destination for property investment. Phillipson, who regularly handles conveyancing transactions involving foreign and non-resident sellers and purchasers, estimates that ‘international clients and institutions will invariably view SA as lower risk, which is essential to encouraging investment in local residential and commercial real estate.’
No longer subject to increased scrutiny and monitoring by the FATF, South Africa’s grey list exit not only renews investor confidence in its regulatory institutions and frameworks, but will also ease the requirements of cross-border transactions, reduce the costs of compliance, and improve access to finance, especially for businesses involved in international trade. ‘Often, international property transactions encompass the establishment of trusts, cross-border capital, and special financing,’ Phillipson remarks. ‘For many investors, doing business in SA will become slightly easier.’
Referencing the heightened compliance demands placed on the property sectorfollowing SA’s greylisting, Phillipson highlights the critical importance of continued adherence. ‘It is imperative that sellers, purchasers, property practitioners, and conveyancing attorneys continue to comply with the requirements of the FIC Act to minimise risk and ensure seamless property transactions.’
At STBB, our team of business-focused attorneys celebrate South Africa’s removal from the FATF’s grey list and look forward to supporting our clients with full-service assistance with property matters, including providing advice on financing vehicles and deal structuring, streamlined cross-border transactions, exchange control assistance, and other commercial transactions.
For expert legal guidance, contact our dedicated team of attorneys at STBB