South Africa risks returning to the Financial Action Task Force’s (FATF) grey list barely a year after its removal, Business Leadership South Africa (BLSA) warns in its October 2026 Reform Tracker.
In the tracker’s foreword, BLSA chief executive Busisiwe Mavuso identifies two areas of stalled reform that put the country at risk of being reinstated: the FATF reforms themselves and anti-corruption reforms linked to the Zondo Commission’s recommendations following its inquiry into state capture.
South Africa was removed from the grey list in October 2025 after addressing all 22 action items identified by the FATF. The most difficult issues involved the legacy of state capture, particularly weak law enforcement and limited capacity to investigate and prosecute complex crimes and money laundering.
The FATF began its Fifth Round Mutual Evaluation of South Africa in mid-2026. Running until October 2027, the evaluation will examine whether the country has sustained the progress that secured its removal.
Law enforcement under scrutiny
One of the requirements South Africa had to meet to leave the grey list was demonstrating a sustained increase in investigations and prosecutions of money-laundering networks.
In June 2026, Ismail Momoniat, who led South Africa’s campaign to exit the grey list, warned Parliament’s Standing Committee on Finance that the country’s ability to investigate organised crime, prosecute successfully and recover criminal assets could come under scrutiny if weaknesses in law enforcement persisted.
In an interview with Financial Mail, Momoniat said: “we’ve seen corruption rise again after state capture”. He cautioned that a poor FATF evaluation would reinforce concerns that the country’s systems were not working.
BLSA also points to disclosures before the Judicial Commission of Inquiry into Criminality, Political Interference and Corruption in the Criminal Justice System, chaired by retired Constitutional Court Justice Mbuyiseli Madlanga. The revelations about alleged corruption and interference in law enforcement are likely to attract the FATF’s attention.
Anti-corruption reforms have stalled
BLSA’s corruption reform index remained unchanged at 51.2 in the July-to-September 2026 quarter. The index had risen from 19.6 in March 2024 to 53.6 between June and August 2025, but progress subsequently plateaued before the score fell to 51.2 in the second quarter of 2026.
Some progress had been made on proposals for an anti-state capture and corruption commission, deferred prosecution agreements, whistleblower protection, a new statutory offence of abusing public office and strengthening the private sector’s duty to prevent corruption. However, the tracker records that these reforms have since lost momentum.
It also records that monitoring of the Zondo Commission’s recommendation to establish a national anti-corruption charter was halted because no progress had been made since tracking began.
The Madlanga Commission has prompted some action. Its interim reports, submitted in December 2025 and May 2026, recommended criminal investigations and disciplinary action against police officials. Several law enforcement officials have since been arrested and charged.
The commission’s final report is expected to be submitted to President Cyril Ramaphosa on 25 January 2027. BLSA intends to incorporate its recommendations into the tracker but says the timing leaves limited room for implementation before the FATF evaluation concludes in October 2027.
A test of results, not promises
The FATF’s Fifth Round Mutual Evaluation will examine whether South Africa’s anti-money laundering system is producing results, not simply whether the country has the necessary laws and regulations.
BLSA expects law enforcement to receive particular scrutiny. The tracker points to South Africa’s weak record of successfully prosecuting people implicated in corruption, as well as the requirement it had to meet to secure removal from the grey list: demonstrating a sustained increase in investigations and prosecutions of money-laundering networks.
The disclosures before the Madlanga Commission are likely to bring these weaknesses into sharper focus. BLSA notes that the commission’s findings have exposed vulnerabilities in the criminal justice system at a time when the FATF is assessing whether South Africa has made lasting progress.
BLSA’s overall completion index rose to 72.5 in the July-to-September quarter, its highest level since monitoring began in March 2024. The criminal justice reform index also edged up from 84.2 to 84.5. However, the corruption reform index remained unchanged at 51.2. This is BLSA’s measure of progress on anti-corruption reforms, not a FATF rating.
Momoniat warned that a poor result in the mutual evaluation would reflect the state of the country’s law enforcement systems.
“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.”
