Ismail Momoniat, who led South Africa’s campaign for removal from the Financial Action Task Force (FATF) greylist, says there’s a “significant risk” that the country will be back on it.
The FATF is an intergovernmental organisation established in 1989 by the G7 to combat money laundering and terrorist financing. Countries that do not measure up to FATF standards may suffer reduced foreign investment, higher borrowing costs and reputational damage in financial markets.
South Africa was removed from the greylist in October 2025. It’s now under an 18-month evaluation process by the global watchdog. Even if it survives the evaluation, there will be little to cheer about. “Passing the evaluation test is a very low bar,” says Momoniat, a former acting director-general of the National Treasury. He led a South African delegation to the FATF plenary in Paris last week.
“Just because you don’t get greylisted doesn’t mean you’re doing well. If we do poorly in the mutual evaluation, it will just reinforce the reality that our systems are not working. We need to drastically improve them so they can deal with crime, and organised crime in particular.”
Even if South Africa stays off the greylist, “hard questions” must be asked about why it still takes so long for cases of serious financial crime to be investigated and prosecuted. “Our entire criminal justice ecosystem just takes too long. It is out of line with most countries, and that is what we really need to spend a lot more energy trying to resolve.”
Momoniat has never pulled his punches. In 2021, 18 months before South Africa was greylisted, he issued a stark warning about what had to be done to avoid this. He also warned then that the country was becoming a mafia state. Revelations from the Madlanga commission suggest that we have now reached this condition, although he’s not prepared to go that far yet.
“We need to take more active steps to make sure we don’t get there. Organised crime is like cancer. You’ve got to eradicate and destroy it, or it spreads. As we see from all the cases that are coming up, it’s getting worse. We’re far from arresting the problem, let alone tackling it.
“The more difficult test for us in South Africa is, are we implementing our laws? Implementation is our challenge. In South Africa we seem to be lousy at it. We face being greylisted again if there is no effective implementation.”
Having a legal framework which ticks the right technical compliance boxes is not enough.
“The issue is, are all our agencies doing what they’re supposed to do? Are police investigating and completing their investigations? Are the prosecutors doing what they need to do? Is the court system doing what it should do? Is the Financial Intelligence Centre [FIC] doing what it needs to be doing? Why is our procurement system not preventing fraud?”
Central to these failures is a lack of accountability, which needs to come firstly at management level, then at the level of parliament and the legislature, says Momoniat. “Are our committees holding agencies to account? They need to become more granular. I don’t think the performance system at the moment is effective. It doesn’t go to the kind of core issues one needs to get to.”
Civil society needs to be more active in holding politically elected officials and public servants to account for their performance.
Five years ago, Momoniat said it was too hard to get rid of compromised individuals in the police and National Prosecuting Authority (NPA). It still is, he says. “Our processes take far too long. We need a much more effective and speedier mechanism. We must have quicker accountability for corruption by top officials. We need to review what rights they have.”
You’ve got to make lifestyle audits conditions of employment. We need to move faster because audits are an absolutely critical and very powerful tool to fight corruption
— Ismail Momoniat
A new anti-money laundering and financing of terrorism law, tabled by the Treasury to empower the FIC to conduct lifestyle audits, is long overdue, he says. Privacy of information laws mean officials and civil servants need to agree to lifestyle audits. “You’ve got to make lifestyle audits conditions of employment. We need to move faster because audits are an absolutely critical and very powerful tool to fight corruption.”
Five years ago, Momoniat also warned that “barriers around confidentiality” were obstructing investigations of financial crime. Judging by the ongoing refusal of the South African Revenue Service (Sars) to hand over former president Jacob Zuma’s tax records, citing confidentiality but in defiance of an order by the information regulator, his warning is still very pertinent, isn’t it?
“It is pertinent, but in our current system I believe that if the police are investigating, they do have access to information from Sars as well as from the FIC.” He concedes that what the police do or do not do with that information “is going to be important”.
“The proof of the pudding at the end of the day is that we’ve seen corruption rise again after state capture, and this needs to be dealt with speedily. There’s no doubt this is taking too long, and the fact that our agencies don’t seem to be accountable means that our system is not working as well as we need it to.”
If the government had acted more decisively on recommendations from the Zondo commission of inquiry into state capture, would we be talking about a mafia state?
“I don’t want to comment on whether and to what extent the Zondo recommendations or Nugent [commission of inquiry into Sars] have been implemented. I think there has been some implementation. Whether it’s been comprehensive enough or quick enough is something else.”
The key issue is whether people identified in the Zondo commission have been investigated and prosecuted. The government can’t tell the police or NPA what to do and who to prosecute, he says.
“It’s whether those agencies do what most people expect them to do — that’s the challenge. There’s no doubt that these cases have not been coming to court at the rate we need to see, and that so many compromised people are walking free, having never been charged. That is not good for us as a country, and it’s not going to be good for us in the FATF evaluation. That’s really the issue. Are these cases being investigated and prosecuted as soon as possible? We’re not seeing enough of that.
“What’s come out of the Madlanga commission is that we need stronger and speedier mechanisms to deal with procurement fraud and corruption the moment it’s identified, and ongoing lifestyle audits for top officials. What the FATF focuses on is organised crime, and if we want to deal with organised crime, we need to be highly organised. That’s not going to happen spontaneously.”
Looking at the evidence from the Madlanga commission, the murder of whistleblower Babita Deokaran and corruption at Tembisa hospital, it is clear that organised crime in South Africa is highly organised, says Momoniat. “If it’s happening in one hospital, you can be sure it’s happening in many others.”
When South Africa was greylisted in February 2023, one of the biggest challenges it faced to be removed from the list was to demonstrate a sustained increase in investigations and prosecutions of money laundering networks. Given the evidence from the Madlanga commission, it clearly didn’t meet this challenge.
So how did South Africa manage to get delisted last year? “Basically, we got greylisted because of state capture. To get off the greylist, we had to demonstrate that we had started to improve. All that exiting the greylist meant was that the FATF had to get vital reports from us that we were doing this.”
Now South Africa is going to have to prove that it has continued doing this, says Momoniat. “It’s going to be much tougher this time round. I’m at the FATF plenary in Paris and you can see how tough the assessment process is. Evaluations progressively get tougher, so what we’re going through this time is much tougher than what we had to go through last time.”
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