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Image: RON
South Africa’s hard-won progress in financial governance has just earned a major international nod: the European Union has removed the country from its list of “High-Risk Third Country Jurisdictions,” a designation that had long complicated trade and financial flows with Europe.
This development follows Pretoria’s successful exit last October from the Financial Action Task Force (FATF) greylist, an equally watched blacklist that flags weaknesses in a country’s anti-money-laundering and terror financing systems.
South Africa was placed on the EU’s high-risk list in August 2023 automatically after it was greylisted by the FATF earlier that year.
The listing required European financial institutions to apply enhanced due diligence on transactions involving South African counterparties, a costly and time-consuming process that added friction to cross-border business, payments and investment into SA.
The EU’s decision to delist SA follows:
Concrete reforms: Pretoria implemented a 22-point action plan to bolster its AML/CFT (Anti-Money-Laundering/Combating the Financing of Terrorism) regime, closing gaps in supervision, improving beneficial ownership transparency, and strengthening legal tools for prosecution.
On-site review: In July 2025, FATF assessors carried out an on-site visit, confirming sustained implementation of reforms — a key step before the October 2025 delisting.
Regional recognition: South Africa was among six African countries (including Burkina Faso, Mali, Mozambique, Nigeria and Tanzania) removed from the EU list after similar FATF exits.
The EU’s removal of SA will take effect on 29 January 2026, dropping the automatic requirement for enhanced due diligence, although institutions may independently adjust their risk policies.
For South African companies and investors, the EU’s decision to remove the country from its high-risk list is far more than a symbolic victory. In practical terms, it opens the door to smoother and less costly financial engagement with Europe.
Banks and investors across the EU can now reassess the additional compliance checks, documentation and risk premiums that were previously attached to doing business with South African counterparts, potentially lowering barriers to foreign direct investment and cross-border financing.
The move also strengthens confidence in trade with one of South Africa’s most important economic partners. Europe accounts for a significant share of South Africa’s exports and imports, and a reduced perception of financial risk can ease supply-chain financing, payment settlements and trade credit arrangements. For exporters and importers, this translates into fewer delays, lower transaction costs and greater certainty in commercial relationships.
At a macro level, the delisting could also have positive implications for the rand and broader capital markets. With fewer frictions in euro-denominated transactions and improved investor sentiment, South Africa may benefit from more stable capital flows.
Given how sensitive the currency is to global risk perceptions, the EU’s decision provides a welcome boost to confidence at a time when international credibility remains critical for economic growth.
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