Nigeria and South Africa may be removed from the Financial Action Task Force grey list as soon as next month, a move expected to strengthen investor confidence in Africa’s two largest economies.
The Paris-based FATF, which oversees global measures against money laundering and terrorist financing, added both countries to the grey list in February 2023 after noting deficiencies in their systems for addressing illicit financial flows.
The on-site inspections were recently conducted in Nigeria, South Africa, Burkina Faso, and Mozambique, according to Bloomberg.
The assessors noted substantial progress, paving the way for all four countries to potentially be delisted on October 24, during FATF’s plenary session in Paris.
Although the final decision requires consensus among FATF’s 39 members, including the United States, United Kingdom, European Commission, China, Japan, and India—analysts say removing Nigeria and South Africa would send a powerful signal to global investors.
“It would be confirmation that the reforms and measures put in place in the wake of the grey listing are both significant and sticky,” said Senior Portfolio Manager at Allspring Global Investments UK Ltd, Lauren van Biljon.
She noted that while the immediate effect on markets might be modest, “asset prices could see a short-term increase.”
Being on the FATF Grey List carries significant long-term consequences.
A 2021 IMF study found that grey-listed countries often experience sharp declines in capital inflows, as investors tend to steer clear of jurisdictions flagged for weak anti-money laundering standards.
For Nigeria and South Africa, both facing economic challenges, removal from the list would help restore confidence in their financial systems and potentially attract increased investment.
https://www.fatf-gafi.org/en/countries/black-and-grey-lists.html
Earlier this year in February, the Chief Executive Officer of the Nigerian Financial Intelligence Unit, Ms. Hafsat Bakari, stated that Nigeria was expected to exit the FATF grey list by late 2025.
