The National Treasury has issued a progress update on getting South Africa off the Financial Action Task Force’s grey list – and they need help from the property sector.
South Africa was added to the grey list in February 2023 because of perceived weaknesses in its anti-money laundering and terrorist financing regimes, deterring foreign investment.
At the FATF’s latest review in June, they announced that SA would remain on the grey list as eight of the areas it identified for improvement haven’t yet been resolved. These include doing more to fight money laundering, prosecuting complex financial crimes, and implementing a better strategy for countering terrorist financing.
In the wake of the review, the National Treasury said it is satisfied with the progress to date, and is still on track to address the outstanding issues by February 2025, which will allow it to exit the grey list in June 2025. However, it recognises the challenges of doing so, and the Minister of Finance is working with the government to secure further improvements.
Could estate agents affect SA's exit from the grey list?
The real estate sector is a prime target for money launderers worldwide because of its high value sale transactions and frequent rent flows, so regulating it is a necessary step to restoring SA’s status as a safe country for international investment. But the Financial Intelligence Centre has warned that poor compliance by estate agents (among other sectors) is “dismantling and disrupting South Africa's efforts to exit the grey list and improve the country's standing in the world economy”.
In March 2023, after SA was placed on the grey list, the Financial Intelligence Centre (FIC) directed estate agencies to complete a risk and compliance return (RCR). The original deadline for submission was 31 May 2023, but to date only 66% of agencies have complied. The industry has made progress since February, when 55% of agencies had returned RCRs, but there still seem to be a lot of holdouts despite the FIC threatening to sanction them.
Some real estate industry leaders have hit back. Jan le Roux, chief executive of the Real Estate Business Owners of South Africa (Rebosa), says he believes the FIC is relying on outdated information and that many ‘non-compliant’ estate agencies have in fact stopped trading. He suggested that the FIC work with the Property Practitioners Regulatory Authority to find out which agencies are currently active.
Meanwhile, any active estate agencies that haven’t yet submitted an RCR can help make a difference to South Africa’s economic future by doing so. Improving compliance will promote a safer, more transparent real estate sector and help restore the country’s reputation.
