Image: Pexels The reality is that South Africa has now moved into a more demanding phase of scrutiny, one that focuses not on whether the right laws exist, but whether they are being effectively enforced. This distinction is critical. Compliance, on paper, is no longer enough. The emphasis has shifted firmly towards outcomes.
From compliance to effectiveness
South Africa’s greylisting in 2023 stemmed largely from concerns about ineffective law enforcement and systemic corruption. While the country responded by strengthening its legislative framework, amending laws governing companies, trusts and non-profit organisations and enhancing the powers of institutions like the Financial Intelligence Centre (“FIC”), the FATF’s expectations have evolved.
The next phase of evaluation will test whether these laws are being used decisively and consistently. This means demonstrating a sustained increase in investigations, prosecutions and convictions for serious and complex financial crimes, particularly money laundering and related offences.
The Madlanga Commission is therefore directly relevant to South Africa’s FATF standing. Its findings go to the heart of the very weaknesses that triggered the greylisting in the first place. The exposure of alleged corruption, infiltration and even sabotage within elements of the criminal justice system presents a stark challenge, but also an opportunity.
A global audience is watching
The world is paying close attention to how South Africa responds. The referrals arising from the Madlanga Commission have been widely publicised, and the FATF will scrutinise the country’s reaction as part of its ongoing monitoring processes.
This is not merely about reputational risk. Failure to demonstrate effective enforcement could see South Africa placed under renewed pressure, with the potential to undermine investor confidence, increase the cost of doing business and, in a worst-case scenario, risk a return to greylisting.
The key question is whether the criminal justice system can act decisively against wrongdoing, even when it involves senior officials.
Accountability as a litmus test
The handling of the Madlanga Commission’s findings is, in many respects, a litmus test for South Africa’s post-greylisting credibility. Allegations involving high-ranking individuals within law enforcement structures are deeply concerning. However, what matters most is how the system responds.
There must be swift and credible action. Investigations must lead to prosecutions, and prosecutions must lead to convictions where evidence supports them. Equally important is the recovery of criminal proceeds. Following the money is fundamental to dismantling criminal networks and demonstrating that crime does not pay.
If South Africa can show that its institutions are capable of holding powerful individuals to account, it will send a strong signal to both the FATF and the global community that the system works, even under pressure.
The broader fight against illicit activity
While the Madlanga Commission has shone a spotlight on corruption within the criminal justice system, the challenge extends far beyond this. South Africa faces a far more expansive and deeply entrenched web of illicit economic activity, encompassing organised financial crime, sophisticated money laundering networks, tax evasion, smuggling and other underground economies. These interconnected criminal enterprises pose a systemic threat to economic stability, governance and the rule of law.
The scale and complexity of these networks enable the generation and movement of vast illicit profits, often channelled through sophisticated financial systems that undermine the formal economy and, in some cases, support more dangerous activities such as terrorism. Compounding this challenge is the legacy of state capture, which significantly weakened key enforcement capabilities, particularly within revenue authorities - making their rebuilding an urgent national priority.
The FATF’s concerns have also included insufficient action against terrorist financing. This places an added responsibility on South Africa to ensure that its enforcement agencies are equipped, coordinated and empowered to tackle these threats effectively.
Strengthening coordination and intelligence
A critical component of effective enforcement is improved coordination. The FIC serves as South Africa’s financial intelligence unit, with its key functions being to receive regulatory reports and transaction data from accountable institutions; interpret and analyse that data to produce financial intelligence for use by competent authorities in investigations, prosecutions and applications for asset forfeiture; produce forensic evidence based on the flow of financial transactions; exchange information with similar bodies in other countries regarding money laundering, terrorist financing, and proliferation financing; supervise and enforce compliance with the FIC Act; facilitate effective supervision and enforcement by other supervisory bodies; and implement financial sanctions adopted under United Nations Security Council resolutions.
The FIC’s work must translate into actionable investigations led by agencies such as the Directorate for Priority Crime Investigation (DPCI).
Stronger collaboration between intelligence, investigative and prosecutorial bodies will be vital. Complex financial crimes require specialised skills, data-driven insights and sustained inter-agency cooperation.
The road ahead - demonstrating effectiveness
The FATF’s next evaluation cycle, known as the 5th Round Mutual Evaluation, which is expected to unfold over the coming one to two years, will be more rigorous than previous assessments. This evaluation, which commenced in early 2026 and is anticipated to conclude by October 2027, is intended to scrutinize the effectiveness of South Africa’s anti-money laundering and counter-terrorist financing (“AML/CFT”) frameworks, demanding measurable outcomes in investigations and prosecutions rather than just legislative compliance.
South Africa has already made significant legislative progress, but the focus will now be on demonstrating real-world impact.
This includes:
- Increased prosecutions and convictions for serious financial crimes
- Effective use of enhanced legal frameworks
- Robust identification of beneficial ownership
- Strong action against terrorist financing
- Improved recovery of criminal assets
Importantly, these efforts must be sustained, not episodic.
A defining moment
South Africa’s exit from the grey list was an important milestone, but it was only half the battle. The country now faces a defining moment. The response to the Madlanga Commission and the broader commitment to enforcing anti-financial crime measures, will determine whether that progress is consolidated or reversed.
There is reason for cautious optimism. The legislative tools are in place. The institutional framework exists. What is required now is consistent, visible and effective enforcement.
Ultimately, credibility in the global financial system is not built on laws alone, but on the willingness and ability to enforce them. Without fear or favour. DM
Author: Steven Powell, Head of ENS Forensics