Sub-Saharan Africa’s two largest economies, Nigeria and South Africa, have been removed from the Financial Action Task Force (FATF) grey list, marking a major step forward in efforts to strengthen financial transparency and curb illicit money flows across the continent.
The Paris-based FATF, the world’s leading global watchdog against money laundering and terrorist financing, announced the decision on Friday at the conclusion of its plenary meeting. Mozambique and Burkina Faso were also delisted, completing what the organisation described as “a positive story for the continent of Africa.”
South Africa and Nigeria were both placed under increased monitoring in 2023, while Mozambique and Burkina Faso had been on the list since 2022 and 2021 respectively.
According to FATF President Elisa de Anda Madrazo, the latest update reflects significant progress made by the four African nations in improving their anti-money laundering (AML) and counter-financing of terrorism (CFT) frameworks.
“With each plenary, we seek to make the world’s defence against criminals stronger, and we have made a number of updates on our grey list,” Madrazo said at a press briefing. “This plenary has been very positive a positive story for the continent of Africa.”
The FATF cited several reforms undertaken by the delisted countries: South Africa strengthened its mechanisms to detect and prevent money laundering and terrorist financing; Nigeria improved inter-agency coordination; Mozambique enhanced information sharing between financial intelligence units; and Burkina Faso bolstered oversight of its financial institutions and regulatory gatekeepers.
Nigeria’s government welcomed the announcement, describing it as a significant boost to investor confidence and a validation of its ongoing economic and governance reforms. South Africa’s government also hailed the decision as a “major achievement,” while acknowledging the need for continued institutional strengthening.
Analysts say the delisting will have far-reaching benefits for the four African economies. The move is expected to ease capital inflows, reduce cross-border payment frictions, and lower borrowing costs for both companies and households.
According to the International Monetary Fund (IMF), being on the FATF grey list can reduce foreign capital inflows by up to 7.6% of a country’s gross domestic product.
“Corporates and individuals will face less friction in cross-border payments once key jurisdictions mirror the FATF decision,” said Vincent Gaudel, a financial crime compliance expert at LexisNexis Risk Solutions. “Banks will expand correspondent services, and trade-finance operations will run more smoothly.”
Bastian Teichgreeber, Chief Investment Officer at Prescient Investment Management, said South Africa’s delisting “provides a modest tailwind for sentiment and risk premia,” signalling renewed investor optimism.
Meanwhile, in a separate development, the FATF issued an updated statement on Iran, which remains on its blacklist despite renewed engagement. The organisation acknowledged Tehran’s outreach efforts but said the country had failed to address most of its action plan commitments since 2016.
The removal of Nigeria, South Africa, Mozambique, and Burkina Faso from the FATF grey list is widely viewed as a turning point for Africa’s financial reputation, reinforcing the continent’s progress in combating illicit financial flows and improving global confidence in its regulatory systems.
