Greylisting: Opportunity for SA to renew its focus on secure financial institutions

Lance Fanaroff, co-founder and chief strategy officer, iiDENTIFii.

---

The recent Budget Speech 2025 highlighted the need for reforms and infrastructural development that will revive economic growth. The country’s potential delisting from the FATF greylist in October 2025 will greatly contribute to this by positioning the country as a secure destination for foreign investment, says Lance Fanaroff, co-founder and CSO of iiDENTIFii.

The country has made encouraging progress, largely addressing 20 of the 22 items in its action plan. Before October 2025, South Africa needs to illustrate 1) sustained increase in investigations and prosecutions of serious and complex money laundering, and 2) an increase in the effective identification, investigation and prosecution of the full range of terrorist financing activities. Meeting these objectives is not only possible, it is a turning point in South Africa’s economic potential.

Lance Fanaroff, co-founder and Chief Strategy Officer of iiDENTIFii, which positions itself as Africa’s leading face authentication and identity verification platform, says: “South Africa’s greylisting in February 2023 initiated an important review of the country’s financial systems. The offshoot of this challenge has been the opportunity to differentiate our economy with robust, secure financial infrastructures that support economic growth.”

To effectively prevent and prosecute financial crime and terrorist financing, institutions need to validate one critical piece of information: a person’s identity. If financial institutions require biometric data for local and offshore transactions, it makes it harder for money to exchange hands in the shadows. In-depth data on transactions will strengthen investigations and aid successful prosecutions. The same applies to terrorist financing, which will become more difficult when funds are protected through robust multi-factor digital identity solutions and updated cyber security protocol. 

Fanaroff says: “We champion biometric liveness as a leading solution to verifying and authenticating a person’s identity. Liveness is the confirmation and verification that there is a human being conducting a transaction on the other side of the screen. While cyber criminals can mine personal data and override certain systems through targeted attacks, it is more difficult to forge a sense of human liveness.”

As the country strengthens its resources against financial crime, there is opportunity for industries and the public sector to collaborate and update cyber laws and approaches. With that plan must be a regular cadence of reviewing new cyber threats. Fanaroff adds: “At iiDENTIFii, we constantly review our technology against emerging cyber threats.

Cyber security is a priority for local institutions. A landmark study by iiDENTIFii – the Identity Index 2024: South Africa Edition – published in partnership with World Wide Worx reveals heightened concern over identity fraud threats in South Africa, with 56.7% of businesses expressing concern or strong concern about future threats.

The Identity Index revealed that an increasing number of businesses in South Africa are adopting IDV solutions with the aims of enhancing security and reducing fraud. The report showed that adoption rates of AI-based fraud detection are at 50.5% and biometric methods are at 39.5%. This demonstrates a strategic shift towards leveraging cutting-edge technologies to mitigate identity fraud risks.

The implementation of IDV and other security solutions doesn’t come without its challenges. Collaboration within industries and between the public and private sector is needed to establish a cohesive approach to cyber security.

Arthur Goldstuck, author, thought leader and founder of World Wide Worx, says: “Despite the trend towards investing in IDV solutions, there are still some significant barriers to implementation, with 31% citing regulatory compliance and 23% citing user acceptance as the most substantial barriers.”

Some positive steps have already been taken, with intentional steps towards enforcing compliance with anti-money laundering (AML) and counter-terrorist financing (CFT) legislation, and the Financial Intelligence Centre Act (FICA).

“This progress will only be accelerated by more co-ordinated industry-wide approaches to biometric identity and cyber crime, from stronger collaboration to a sustained commitment to investing in advanced technologies,” says Fanaroff.

In conclusion – the resolution of South Africa’s greylisting status is hopefully in sight. If public and private organisations are strategic and intentional about their response to the action items, it could result in a strong, secure foundation for rapid economic growth.