It’s Greylisting, not Blacklisting: Implications of Greylisting on Human Rights Promotion in South Africa.

By: Stanley Ehiane

Over the last decades, human rights have grown in popularity, and have gradually begun to appear in the discourse of international human rights organizations and other human rights bodies. Today, human right is widely acknowledged as a critical component and performance criterion for assessing good governance. The Universal Declaration of Human Rights (UDHR), calls on “every individual and every organ of society” to promote freedoms and rights through instruction and education.

Human rights as we know them today were first introduced after WWII, but their recent rise to prominence was a modernization of an old concept. The notion that everyone must be treated fairly in accordance with natural or divine law is centuries old. This idea was linked to the concept of natural rights in the writings of thinkers such as John Locke and Thomas Jefferson, as well as in declarations of rights such as the French Declaration of the Rights of Man and Citizen and the United States Bill of Rights. It could be argued that our current understanding of human rights is simply a continuation of this concept. However, if the Universal Declaration and the Covenants are viewed as contemporary human rights ideas, the latter differs from the former.

The Bill of Rights serves as the guiding principle for South African democracy. All South Africans’ rights are protected, and democratic ideals such as freedom, equality, and human dignity are all upheld. Everyone has a right to these liberties, but they also have a responsibility to protect them. Nonetheless, the ultimate goal of the terrorist is the abolition of human rights. The UN Charter and other international agreements, such as respect for human rights, are being called into question. Terrorism targets the fundamental components of democracy and the rule of law, both of which are required for the protection of human rights. Terrorist activity has grown as a result of funding for terrorist organizations.

Sponsoring terrorism in Africa has become a threat to both humanity and democracy. More than half of all reported crimes in South Africa fall into categories that generate proceeds, and both the number and severity of crime in the country are extremely high. The primary domestic offences that generate revenue are tax evasion, corruption and bribery, fraud, illegal drug trafficking, and environmental crimes. Because of its large economy and role as a regional financial centre for Sub-Saharan Africa, South Africa is significantly vulnerable to the risk of foreign proceeds of crime from the region being laundered through or in the country. South Africa faces risks related to international terrorism funding, recruitment of overseas terrorists, and potential domestic terrorism. South Africa has only had one successful anti-terrorism trial in the last ten years, according to the Financial Action Task Force (FATF). South Africa responds positively to requests for cooperation in terrorism investigations, but it takes time. Some FATF members considered this failure when deciding how to respond to the South Africa mutual evaluation report. South Africa has been added to the FATF’s “grey list” due to a lack of adequate controls and defences against money laundering and terrorism funding.

Greylisting and Blacklisting

The practice of “greylisting” entails a closer examination of South Africa’s initiatives to combat major crime financing. Greylisting is unquestionably preferable to blacklisting because it demonstrates that a country is attempting to comply. The inclusion of the country on the greylist indicates that the FATF has discovered strategic flaws in that country’s procedures for preventing financial crimes. South Africa performed very poorly in the prevention, monitoring, and prosecution of terrorism finance, as well as transparency around politically exposed individuals and beneficial ownership of Corporations and Trusts. Warnings from the FATF and other authorities are interpreted by banks and financial institutions as a request to conduct more thorough due diligence on clients or face repercussions from the regulators, such as disciplinary measures or financial penalties. When a country is added to the “grey list,” its reputation suffers the most because it is thought to be less effective than other nations at combating financial crimes such as money laundering and corruption, as well as financing terrorism. Items on the greylisted list are temporarily restricted or prohibited until the following action is taken. This is a violation of the blacklist. Only countries with significant strategic deficiencies and a high risk of being blacklisted are blacklisted.

Greylisting and its effects on South Africa

According to the Financial Action Task Force (FATF), a global organization that monitors financial crime, South Africa has been added to the “greylist” of nations that must adhere to stringent regulations to prevent terrorism financing and money laundering. The FATF, a strong intergovernmental organization that establishes global standards for combating money laundering, terrorism financing, and proliferation, has designated South Africa as a “jurisdiction under heightened supervision.” Except for Turkey, the only other G20 country on the greylist is South Africa.

How would greylist affect South Africans? Although greylisting may restrict access to international financial markets and raise trade costs, international markets have generally anticipated and taken greylisting into account. When a country is added to the “grey list,” its reputation suffers the most because it is thought to be less effective than other nations at combating financial crimes such as money laundering and corruption, as well as financing terrorism. The national treasury claims that state capture under former President Jacob Zuma’s rule harmed several South African institutions, contributing to the country’s poor performance in the 2019 FATF mutual evaluation. South Africa has been added to the FATF’s global list of countries that pose a risk to the global financial system. Even though the FATF does not require such measures, as a result of South Africa’s graylisting, some foreign banks, institutions, and organizations, such as the European Commission, may employ stringent due diligence procedures when dealing with South African entities such as people, businesses, and banks. Greylisting has the potential to stymie these economic gains. Greylisting, on the other hand, provides a powerful incentive for countries to take long-overdue steps.

Implication on Human rights

Terrorism is a problem for human rights because it violates both the right to life and the right to physical integrity when it targets individuals and critical infrastructures. Terrorism has a direct impact on people’s ability to exercise their right to life, liberty, and physical integrity, particularly for terrorist victims. It can impasse social and economic progress, disrupt peace and security, and destabilize entire nations. Terrorism’s goal is to violate human rights by using force and instilling fear in civilians. Although government intervention is necessary to prevent and sanction terrorist acts, not all strategies are effective.

Money laundering, on the other hand, is a method used by criminals to conceal or disguise the proceeds of their crimes so that they appear to have come from a legitimate source. This implies that thieves can use their assets—their stolen money—without raising suspicion or drawing attention to themselves. Money laundering is the process of concealing the original transaction while converting proceeds from illegal businesses into legal assets. Money laundering and drug trafficking are frequently linked in Southern Africa. South Africa has the subregion’s largest medication market. Human rights violations are the foundation of money laundering. This must be handled correctly. The Financial Action Task Force has placed South Africa on its “greylist” due to lax regulation of financial crimes such as money laundering and terrorism funding. The FATF does not impose fines or punishments on countries on its list because greylisting is not a global judicial process. Being on the “greylist,” on the other hand, indicates that a country’s anti-terrorist financing and anti-money laundering safeguards are insufficient. South Africa is not the first country to face pressure to pass new laws to meet FTAF requirements. Whether nations imposed legislative changes to conform to FATF guidelines as a cover for excessive regulation of civil society or as a sincere but futile attempt to prevent economic exclusion, the FATF should be required to speak out when human rights violations occur. This is true whether or not the FATF recognizes its role.

Concluding Remarks

When a country is placed on the greylist, its government has agreed to implement an action plan within a specific time frame, and FATF monitors its implementation to address any shortcomings discovered during its joint evaluation after an observation period. South Africa had a fantastic anti-money laundering system thanks to institutions that worked hard to maintain national integrity. First and foremost, South Africa should not have faced this threat. We are not moving quickly enough to repair critical institutions and reduce the risks posed by years of state capture, which is why we are considering greylisting. State capture harmed the reputations of institutions and caused enormous harm. Greylisting should not depress people, but it should draw their attention. Without a doubt, rapid recovery is possible if governments act properly within predetermined timelines. South Africa requires strong public-private cooperation to address the FATF’s concerns and exit the greylist as soon as possible without causing unnecessary economic harm. South Africa, one of the few countries that contributed to the development of the FATF rules, could have avoided the current situation with timely government action and beneficial business engagement.

The need for stricter legislation to combat corruption, money laundering, and terrorism financing in South Africa has never been greater. South Africa must broaden its financial intelligence and law enforcement cooperation with other countries. As a result, law enforcement must make use of all critical data provided by financial institutions through reports and other activities involving suspicious transactions. The ultimate impact of a greylist on governance is determined by how it is implemented as well as the underlying goals and objectives of those involved. Greylists should be used in most governance situations to ensure that fundamental principles such as the rule of law and respect for human rights are upheld.

South Africa must strengthen its risk assessment of terrorist financing to inform its plan to stop the financing of terrorist operations. Furthermore, it must ensure that targeted financial sanctions are properly implemented and develop effective tools for identifying the individuals and organizations who should be subject to them. To avoid the trap of greylisting, the country must fight the rot of money laundering and terrorist funding.

Dr. Stanley O. Ehiane is a senior lecturer in the department of politics and administrative studies at the University of Botswana. Gaborone, Botswana. He writes in his capacity.