South Africa’s standing in the global financial system received a notable boost this week after the European Union confirmed that the country has been removed from its list of high-risk third-country jurisdictions, a move that follows South Africa’s exit from the Financial Action Task Force’s (FATF’s) grey list.
The decision marks the end of a designation that had added layers of scrutiny to cross-border transactions with European financial institutions and complicated trade, investment, and payments involving South African entities.
As reported by BusinessTech, the EU’s high-risk designation required its financial institutions to apply enhanced due diligence to transactions involving South Africa.
National Treasury previously warned that this resulted in ‘more rigorous and intrusive checks, increased documentation requirements, continuous monitoring, and senior management approval for transactions.’
These measures, Treasury said, introduced friction into financial flows, affecting trade, payments, and investment relationships between South Africa and European partners. With the delisting now confirmed, that friction is expected to ease, although not disappear entirely.
South Africa’s removal from the EU’s list will officially take effect on 29 January. However, National Treasury has been careful to temper expectations.
BusinessTech reports that Treasury stressed that the decision does not force EU financial institutions to immediately change their internal risk assessment policies. Instead, it ‘allows willing EU financial institutions to adjust their risk assessment policies as they see fit.’
In practice, this means banks and investors will still make independent decisions on how they assess South African risk, even as the formal EU designation falls away.
Treasury has also acknowledged that the delisting does not signal the end of South Africa’s compliance challenges. While progress has been made, authorities say further work is needed to strengthen the prevention, detection, investigation, and prosecution of money laundering and terrorism financing.
South Africa is set to enter a new round of FATF evaluations in the coming months, with a final report expected to be presented to the FATF plenary in October 2027.
‘Preparation has begun in earnest, incorporating the lessons learnt and experience gained during the process to exit FATF greylisting,’ National Treasury said.
Beyond regulatory compliance, the timing of the EU decision aligns with a cautiously improving economic outlook.
BusinessTech reports that economic growth is expected to reach about 1.5% in 2026, supported by lower inflation and interest rates. This would mark a clear improvement from the 0.7% growth recorded in 2023 and 2024, with 2025 forecast at around 1%.
Inflation is expected to remain close to the South African Reserve Bank’s revised 3% target, helped by a stronger rand, lower fuel prices, and favourable rainfall.
These conditions are expected to give the SARB room to continue its interest-rate cutting cycle, with two 50-basis-point cuts widely anticipated in 2026, potentially taking the repo rate to 6.25%.
While Treasury has cautioned that South Africa is ‘not yet out of the woods,’ removal from both the FATF grey list and the EU’s high-risk register reduces a key reputational and operational hurdle for the economy.
The development adds to a growing list of positives heading into 2026, at a time when policymakers are looking to stabilise confidence, encourage investment, and support economic momentum.
Be the first to know – Join our WhatsApp Channel for content worth tapping into! Click here to join!
Also read:
Calabash SA 2026 cancelled after Muse withdraws from international tour
Picture: Getty Images
