After successfully meeting the stringent requirements of the Financial Action Task Force (FATF) and being removed from the FATF greylist in October 2025, South Africa’s nonprofit sector now faces a new challenge: adapting to the significant regulatory and legislative changes introduced for anti-money laundering and countering the financing of terrorism (AML/CFT). Feryal Domingo, Chairperson of the NPO Working Group and Acting Executive Director of Inyathelo, explains how the focus shifts from reform to embedding long-term governance as the new operational standard.
What did South Africa’s greylisting by the FATF mean for the nonprofit sector?
It was a national wake-up call. However, for nonprofit organisations, it was the culmination of years of effort to ensure global financial rules did not unintentionally damage our development work. As South Africa strengthens its compliance systems, it is crucial to distinguish between genuine risk management and unnecessary bureaucracy.
The NPO Policy Task Team (NPOTT) was established in December 2018 as part of South Africa’s FATF-led response to identify and monitor nonprofits at risk of terrorist financing. Is NPOTT effectively translating global AML/CFT standards into real support for nonprofits?
The challenge lies in translating high-level global policy into practical, accessible support for grassroots organisations. There is an urgent need to facilitate practical guidance for nonprofits navigating the Department of Social Development’s (DSD) deregistration campaign, the new South African Revenue Service (SARS) Section 18A requirements and general AML/CFT compliance. Sector partners require support to provide practical guidance and training that helps beneficiaries to navigate these intersecting regulatory demands.
FATF’s Recommendation 8 (R8) is creating broad compliance pressure across the nonprofit sector. Could you clarify how R8 should be applied, and how nonprofits can determine if they fall within the ‘at-risk’ category?
FATF R8 is the global standard designed for preventing nonprofits from being exploited as conduits for illicit financing. The revised R8 standard now explicitly demands that measures be focused, proportionate, transparent and risk-based, based on the findings of ongoing sectoral risk assessments. These measures should not unduly hamper legitimate nonprofit activities. While not explicitly detailed, nonprofits that fall into the ‘at-risk’ category are subject to compulsory registration and intensified scrutiny, particularly those with complex or opaque financial flows and those operating cross-border.
How can smaller nonprofits adopt a risk-based approach without overstretching their resources or compromising their mission?
Nonprofits must master governance as an act of resilience, focusing on robust processes and transparency. They should implement transparent internal governance and compliance systems to demonstrate due diligence, while ensuring that all financial and governance management is professional and transparent to safeguard the organisation from misuse.
How does tax status – such as PBO registration or Section 18A eligibility – intersect with FATF-related compliance, and how can nonprofits stay aligned on both fronts?
Tax compliance is a crucial enforcement arm of the overall AML/CFT framework, ensuring financial visibility. Nonprofits must navigate the DSD’s deregistration campaign, the new SARS Section 18A requirements and AML/CFT compliance simultaneously. They must professionalise their financial management to meet these intersecting demands and ensure that their governing documents and operations support transparency (for example, through beneficial ownership disclosures).
What do you recommend nonprofits do to keep abreast of regulatory changes, provide input and ensure they are compliant?
Nonprofits should champion and engage with sector networks, like the NPO Working Group, which are actively providing input on the development of the NPO Policy Framework. This framework is crucial for a stable regulatory future. They should prioritise building capacity by seeking funding to support governance training for boards and investing in professional compliance systems. Nonprofits should embrace the resilience that comes from rigorous governance and compliance, which cements the sector’s reputation as a trustworthy and indispensable force for positive change.
How does this relate to South Africa’s broader development goals?
The nonprofit sector manages billions of rands in public benefit funds and provides essential services where neither government nor business can reach. Strengthening transparency is not about appeasing FATF. It is about protecting our social dividend and ensuring resources reach those who need them most.
What is the NPO Working Group calling for?
We urge business and corporate social investment partners to invest in nonprofit governance and compliance capacity. This will help keep South Africa off the greylist while fortifying the institutions that underpin social impact and trust.
What is the key message for the road ahead?
Compliance is not a cost – it is the foundation of trust. Investing in compliance and good governance allows us to build stronger, more credible institutions that deliver lasting impact.
FERYAL DOMINGO | Acting Executive Director, Inyathelo | feryal@inyathelo.org.za | www.inyathelo.org.za/
