SA's greylist exit expected to renew investor confidence in country - Inyathelo

Inyathelo, the South African Institute for Advancement, said that South Africa’s delisting from the notorious greylist is expected to renew investor confidence and directly translate into a more favourable funding environment for the non-profit sector.

South Africa exited the list of jurisdictions under increased monitoring on Friday, after more than two years of intense scrutiny by the Financial Action Task Force.

The global financial crime watchdog placed the country on the list in February 2023 for not complying with international standards around the prevention of money laundering and terrorist financing.

Non-profit organisation, Inyathelo, said that South Africa’s swift and comprehensive action to address all of 22 identified deficiencies was a significant achievement and a positive vote of confidence in the integrity of the country’s financial systems.

The NPO said this significant milestone was particularly crucial for the sector, which relied heavily on trust, reputation, and unfettered access to both local and international funding channels.

"We had noted several concerning and even disturbing effects of the increased regulatory scrutiny. These included a reduced ability to fundraise for legitimate causes, significant reputational damage to the sector as a whole and financial institutions imposing burdensome due diligence requirements or, in some cases, closing NPO bank accounts," says acting executive director for Inyathelo, Feryal Domingo.

South Africa’s exit from the greylist is expected to reduce administrative costs and restore the sector’s standing among international donors and financial partners.

"We must, however, not lose momentum and continue our efforts to stay off the greylist. Now more than ever, South Africa should focus on addressing Recommendation 8, which is concerned with protecting NPOs from being misused for terrorist financing, requiring countries to review their NPO laws and implement risk-based, proportionate measures to protect vulnerable organisations without disrupting legitimate activities," Domingo adds.

Inyathelo has called on the global community to re-engagewith the country’s non-profit sector, knowing that there are robust systems in place to promote transparency and accountability.