By Ntombi Mhlongo
With the Financial Action Task Force set to issue a verdict on whether to include South Africa on its so-called ‘grey list’, the Kingdom of Eswatini will be keeping its fingers crossed.
This is because South Africa’s woes could have a spillover effect on Eswatini based on the connectedness of the Eswatini economy to that of South Africa.
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The impending threats would automatically inflict the same economic destruction on the Kingdom of Eswatini because the two economies are integrated.
It has been confirmed that the Financial Action Task Force, which polices compliance with anti-money laundering and terror-financing measures, will decide whether to include South Africa on its “grey list” during meetings scheduled for February 20 to 24.
That’s after an evaluation carried out in 2019, following an era of endemic graft, found South Africa lacking in all 11 of its effectiveness measures to combat dirty money flows.
Should the ruling not be in SA’s favour, the neighbouring country will suffer dire consequences.
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South African media house, News24 reported that once included in the ‘grey list’, the South African government and state-owned companies will find it harder to borrow money. This could also result in banking and asset-management fees increasing if the country is added to a global watchdog list of nations with shortcomings in tackling illicit financial flows.
“The classification will mean increased financial oversight and put South Africa on par with the likes of Syria, the Democratic Republic of Congo and South Sudan. It will also weigh on the reputation of a nation which has a flagging economy, a 32.9 per cent jobless rate and a full house of junk credit ratings,” News24 reported.
It further mentioned that upon greylisting, South African holders of offshore accounts will automatically be considered higher-risk clients by financial firms with operations outside the country. This will trigger more onerous due diligence processes and increased costs that may be passed on to clients.
