Is it working?

The FATF’s recent upgrades indicate that the risk-based approach towards Designated Non-Financial Businesses and Professions supervision is yielding positive results, as South Africa is considered to have largely addressed several AML/CFT compliance requirements. The improvements in DNFBP oversight suggest that South Africa’s plans are effectively increasing compliance and risk awareness within these sectors. Further progress was achieved in February 2025 with sectoral supervisions in place, with guidelines and increased inspections. Smaller financial institutions and DNFBP reporting now meet FATF standards and sector alignment is robust across established entities.

Actions

South Africa has implemented risk-based supervision for designated non-financial businesses and professions (DNFBPs), focusing on assessing and managing the specific risks posed by various professions within this sector. Plans include setting up a regulatory framework that mandates DNFBPs to comply with AML/CFT requirements, such as customer due diligence, suspicious transaction reporting and record-keeping. The government is also investing in DNFBP training programmes to increase awareness of AML/CFT responsibilities and develop best practices for identifying and reporting suspicious activities effectively.
The approach has included the following initiatives: conducting comprehensive risk assessments of DNFBP sectors to identify vulnerabilities and emerging threats; strengthening risk assessment methodologies and frameworks to reflect evolving risks and international best practice; collaborating with industry stakeholders, regulatory bodies and international partners to gather insights and expertise; enhancing data collection and analysis capabilities to support evidence-based risk assessments; implementing some of the recommended targeted measures and regulatory reforms based on the findings of risk assessments to mitigate identified risks effectively; monitoring and evaluating the effectiveness of implemented measures and making necessary adjustments to enhance effectiveness." FSCA-led workshops and periodic audits have now reinforced compliance in established sectors.

Are there plans?

There are three key plans. 1) Implementing and keeping up-to-date supervisory risk assessment tools identifying high-risk DNFBPs as a basis for risk-based supervision. 2) Conducting inspections on a risk-sensitive basis of high-risk DNFBPs. 3) Conducting training and awareness programmes on their AML/CFT obligations, mainly regarding filing and submitting STRs filed in line with risks. Rolling audit plans for DNFBPs are integrated with agency sector reviews, targeting areas where historical gaps were identified by FATF and government oversight.

Is it on the agenda?

Yes, the government started raising concerns around improving risk assessment of DNFBPs in 2017-18 to align with global standards and practices. Periodic review is enacted at regulator level, with Cabinet support for sector-wide risk management refresh cycles.

Goals

The aim is to ensure that smaller financial institutions and designated non-financial businesses and professions (DNFBPs) must be able to both identify and understand their money laundering risks. This requires the enablement of specific mechanisms to allow for sharing of risk assessments between FIs and DNFBPs and, ultimately, sectoral risk assessments of all DNFBPs must be published on the FIC website.

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) National Treasury