What it took to get SA off the grey list

The last two years took hard work and having to sacrifice Christmas for the 60-odd-person team who fought to have South Africa removed from the greylist to finally succeed.

The Paris-based Financial Action Task Force (FATF) placed South Africa on their grey list in February 2023 due to inadequate laws and action in the country to tackle money laundering, the financing of terrorism, and the proliferation of dangerous weapons.

One of the stars of the fightback was former state prosecutor Marnus Steyn. “For two years we did not have Christmas, but the delisting is a great gift that makes up for that,” he told Business Times.

“We really had to fix some of the things pointed out after the 2019 mutual evaluation. Our justice system is now in a better place, but it was a lot of hard work, especially the last two years. The northern hemisphere has its long summer holidays during our winter. For them, Christmas is just a weekend. So, the requests would come rolling in over December, with deadlines like December 23 and then again January 3. The 60 people we had working together on this can fairly say they did not have Christmas the last two years.”

Steyn said they discovered the extent of the negative perception about South Africa in 2019 when the FATF conducted the mutual review that would eventually result in the greylisting. “We got the feeling that the assessors walked in with preconceived opinions. ‘Animosity’ is maybe a strong word, but the assessors were definitely adversarial. And it was no peer-on-peer review. My assessor on Immediate Outcome 8 was an English Silk who practises in Hong Kong.

“We gradually won the confidence of the assessors by showing we were serious about the issues, and addressing them. Our last meeting was almost as if it was attended by two completely different sets of people from the ones who started out so adversarially in 2019.”

When told he was pointed out by sources in the know as a main difference maker in the journey to SA being removed off the greylist, Steyn waved the praise away.

“One of the most important moments was when all the SA stakeholders started sitting around the table regularly and we could start working on the problem together. I’m talking about entities like the Reserve Bank, IDAC (Investigating Directorate Against Corruption), Asset Forfeiture (unit), the Treasury and so on,” he said.

Originally a “blood and guts” prosecutor, Steyn helped a colleague put up a performance management system in the Southern Gauteng court district years ago, which landed him in the performance management unit.

In 2017, while working closely with the Financial Intelligence Centre (FIC), he was asked to look into Immediate Outcome 8 from FATF, as there was a mutual evaluation looming in 2019. For a country to successfully address all of FATF’s eight outcomes to avoid greylisting, the watchdog wants to know how good it is at preventing money laundering, terror financing, and the financing of weapons of mass destruction through its financial systems.

“They want to know how good we are at finding these funds and assets and freezing or taking them. These three components are really the same thing. The same elements used to launder money are used to get funds together to finance terrorism or weapons of mass destruction.”

But in 2019, trouble and greylisting were mounting up. “When I started studying the FATF stuff, I realised we were actually in deep trouble for the next evaluation. Nobody really had any statistics for forfeiture in place, and the Immediate Outcome 8 focused on that specifically. In October 2017, I went to my boss and said, ‘listen, we have trouble. We will have to do something on this’. He just said I must continue,” Steyn said.

He likens having to appear before FATF assessors to appearing face-to-face before an appeals court.

“Appearing in that room was very similar to appearing in a court of appeal, but with a major difference ... in court, you are limited to the facts of your matter. Here you are not. You can prepare everything you can think of on a certain issue, and then they ask something completely left field. Luckily, my past experience as a prosecutor taught me to think on my feet under pressure.”

Assessments were conducted every four months to check what progress was being made.

Steyn said the South African side often disagreed with the methodology applied by the assessors, which caused them loads of frustration. “One example was when they came back and said, ‘you must continue to enhance your ability to confiscate the proceeds emanating from money laundering and terror financing’. And that’s that. No indication of what they mean. No indication as to any measurables or even what they would see as effective.”

It took a conversation with the initial greylist project leader, Rodney de Kock, to spark an idea. They decided to use to their advantage the assessors’ vague guidance on what needs to be fixed. So, instead of focusing only on what progress the country had made in detecting and containing terror financing, for example, they would give FATF a complete picture of how good South Africa was at taking money away from criminals and criminal enterprises through generation.

“Any money generated from crime can be taken by the state, not only money financing weapons of mass destruction or terror. It also shows how we have enhanced that ability.”

While the assessors didn’t initially buy into the plan, they eventually came around. “I told them that if we look at Immediate Outcome 8, and we talk about confiscating the proceeds of criminality, we are also talking about the total ability of the state. After a few very high-tempered sessions, FATF’s assessors started buying into this idea.

“To get off the greylist, we had to address every single one of the Immediate Outcomes. It is a good thing in a way, because it is about sustainability. To fulfil these obligations, we have to continue driving cases and showing that our abilities in these matters are sustainable and not a flash in the pan.”