While South Africa has been removed from the Financial Action Task Force’s (FATF) “grey list,” a leading political economist has warned that the country’s fundamental vulnerabilities to financial crime remain largely unaddressed, raising the risk of backsliding without continued public scrutiny.
The caution comes from Professor Patrick Bond of the University of Johannesburg, who, in a recent interview, argued that the delisting may have come too soon and could signal a dangerous reduction in international oversight.
Professor Bond pointed to a litany of ongoing issues, suggesting the 22 legislative interventions made by the government were insufficient. He identified “transfer pricing by big corporates” as the primary vulnerability, a form of illicit financial flow distinct from the drug money laundering and terrorist financing typically associated with the FATF.
“The main thing is that you can rank our vulnerabilities and you’d probably find transfer pricing by big corporates at the very top,” Bond stated.
He supported his argument by citing several high-profile cases of alleged financial misconduct that, in his view, demonstrate systemic failure. These include 28 banks “fingered for their currency manipulation,” a scandal he said was pursued by the Competition Commission while the National Treasury and the South African Reserve Bank were “asleep at the wheel.”
He also referenced the incident involving President Cyril Ramaphosa, who “had lots of US dollars stuffed in a couch,” alleging that the South African Revenue Service (SARS) and the Reserve Bank responded with a “nudge nudge wink wink.”
The professor expressed deep concern over institutional corruption and incompetence, specifically naming the South African Police Service (SAPS) and the National Prosecuting Authority (NPA). “The police, we’re now learning, is rife with corruption. The national prosecuting authority has been quite incompetent,” he said.
This assessment was echoed in recent claims of corruption within the police and judiciary, which Bond believes should be a major concern for the FATF. He argued that the core problem lies in a “pro-corporate deregulatory agenda” that has seen the steady erosion of financial controls, including approximately 35 deregulations of exchange control since 1994.
While acknowledging that the grey listing had created some “friction” for moving money in and out of the country over the past two and a half years, Bond believes the underlying enforcement by Treasury and the Reserve Bank has been weak.
The potential consequences of this premature delisting, according to Bond, are severe. He fears it could lead to a surge in “short-term portfolio flows” that fuel financial speculation without benefiting the real economy, and could embolden corporations and banks to believe they are “off the hook.”
“The effect of this grey listing now being lifted is to improve foreign short-term portfolio flows into our stock market… that may not be helpful for us,” he said, describing it as a potential license for “more financialization and speculation and frankly parasitical activity.”
With the international regulatory pressure now eased, Bond called for domestic actors to fill the void. He emphasized that the responsibility now falls to “trade unions and community organizations, public interest groups, NGOs,” along with rigorous journalism, to act as watchdogs over the Treasury and Reserve Bank.
The economist also contextualized South Africa’s delisting within a broader global trend of deregulation, citing the weakening of the US Foreign Corrupt Practices Act (FCPA) under the Trump administration. He noted that similar delistings of Nigeria, Burkina Faso, and Mozambique may not signify genuine improvement but simply better access to foreign finance for debt repayment, often stemming from corrupt deals.
Professor Bond’s stark conclusion is that the international community has given South Africa a “pass,” and without a concerted effort from civil society to demand tighter financial controls and better implementation, the country’s economy remains vulnerable to the significant drain of illicit financial flows, which he noted the Financial Intelligence Centre has estimated could be as high as 7% of GDP annually.
