The international financial watchdog Financial Action Task Force has added South Africa on its greylist (FATF). During a five-day plenary conference in Paris, the FATF announced the decision on Friday afternoon.
The body had also determined that South Africa did not have stringent anti-money laundering and counter-terrorism funding regulations.
South Africa and Nigeria have been added to the list of nations that will be attentively examined.
Thapelo Tsheole, CEO of the Botswana Stock Exchange, presented his country’s experience of what South Africa should expect.
“It becomes harder for you to attract new investors into your market, both domestic and foreign investors, and some investors begin selling off their shares and divesting from the market,” he said in a statement.
South Africa’s National Treasury has stated that it is investigating how Mauritius and other countries were able to remove themselves off the grey list, and that it would request that the FATF reconsider its position at its June plenary session.
While greylisting may increase the government’s foreign-funding expenses and impede trade flows, it is unlikely to have a “substantial” impact on South Africa’s rating, according to S&P Global Ratings analysts Samira Mensah, Zahabia Gupta, and Omega Collocott.