It's a move that could impact new opportunities for investors to mine: On October 18, 2025, South Africa was officially removed from the Financial Action Task Force (FATF) “grey list” of jurisdictions under enhanced monitoring for money-laundering and terrorist-financing risks. The decision marked the culmination of more than two years of reforms to strengthen the country's anti-money laundering and countering the financing of terrorism (AML/CFT) systems. FATF said South Africa has successfully implemented a comprehensive, 22-point action plan, demonstrating improved compliance with global standards.
Although this development was widely interpreted as an improvement in financial governance and global credibility, its implications for the mining industry – perhaps South Africa's most economically important sector – are particularly notable. The mining sector, particularly gold and coal mining, has historically been involved in widespread discussions about illicit financial flows, money laundering and regulatory enforcement. Strong AML systems can therefore meaningfully impact how capital enters and exits South Africa's mining value chains.
South Africa's mining industry has long been a cornerstone of the country's economy. It is a major producer of gold, platinum, diamonds and coal – commodities that historically fuel industrial growth, export revenues and employment. Large mining houses such as Anglo American, Siboney-Stillwater and others remain internationally important, while smaller and sometimes informal operations have proliferated due to economic pressures and regulatory challenges.
Despite its economic importance, the mining sector has been plagued by structural issues: declining production in some commodities, labor tensions, environmental concerns, and the rise of illegal mining and smuggling networks. Over the past decade, as high-grade deposits have matured or been exhausted, criminal syndicates and informal groups – often locally referred to as “Zama Zama” – have moved into abandoned or less-regulated shafts. These operations are typically associated with broader criminality and, in some contexts, money laundering.
Placement on the FATF gray list – to which South Africa was added in February 2023 – had a significant impact on the wider economy. Grey-listing indicates that a country's AML/CFT regime has strategic weaknesses that could be exploited by illicit actors. This situation generally increases international compliance costs, increases due diligence by global banks and may reduce foreign investment.
For the mining sector, which is both capital-intensive and globally integrated, the consequences of gray listing could be quite severe. For example,
International investors and banks often weigh compliance risk in mining finance decisions. Grey-listing may increase borrowing costs or tighten due diligence requirements, particularly where cross-border financing is involved. Removing South Africa from the gray list could alleviate some of these burdens by prompting stronger AML oversight, potentially reducing the cost of capital and encouraging foreign direct investment in mining projects ranging from exploration to downstream beneficiation.
Illegal mining and trafficking of gold and other minerals has been linked to underground financial networks that exploit weak AML enforcement. These operations often obscure the proceeds of stolen or illegally mined minerals through layering transactions, shell companies and cross-border transfers. A strong AML framework makes it harder for these networks to operate, as financial institutions become more able to detect, report and block suspicious transactions.
Mining companies operate within complex regulatory frameworks governing environmental compliance, labor relations, and export controls. The gray list had created uncertainty about financial regulation, with some observers warning that systemic weaknesses in oversight could undermine investor confidence. Delisting, supported by demonstrable reforms, could help stabilize the perception of South Africa as a legitimate and well-regulated investment destination for mining capital.
To better understand the relationship between AML law enforcement and mining, consider some past cases and scandals that involved illicit financial flows associated with mining, resource trafficking, or financial crime.
A notable example involves cross-border illegal coal mining operations in Mpumalanga province. In January 2025, working with Namibian financial intelligence officers, the Asset Forfeiture Unit of the National Prosecuting Authority (NPA) seized 52.5 million South African Rand from bank accounts as the proceeds of alleged illegal coal mining and related crimes (including money laundering). These funds were identified as part of wider illegal activities involving illegal withdrawals.
This case shows how illegal mining – beyond physical crime – is often linked to financial crime. The illegal extraction of valuable resources generates cash that can be laundered through complex banking transactions to hide its origin, avoid taxation, and fund further illegal activity. Strong AML enforcement enables law enforcement to disrupt this cycle by identifying and interdicting the financial proceeds of environmental and mining crimes.
Historically, gold has been one of the most attractive but vulnerable commodities for smuggling and money laundering. Investigations into the so-called “gold mafia” operation revealed that some bank officials at major South African banks were implicated in money laundering in exchange for bribes – enabling the criminal network to move illicit gold proceeds out of the formal financial system.
These disclosures highlighted weaknesses in AML controls within South Africa's financial system, particularly in the monitoring of transactions involving resource-linked activities. The results of such schemes have captured public attention and underline why strong AML frameworks are important to prevent mining-related financial crime.
Beyond specific criminal cases, trade misinvoicing in mining – a practice in which the value of mining exports or imports is deliberately under- or overstated – has been documented as a source of illicit financial flows out of South Africa. Studies have estimated that a large amount of revenue was lost due to misinvoiced exports of minerals; Such flows not only reduce government revenues but also facilitate capital flight and obscure the real economic contribution of mining.
The removal from the FATF gray list does not mean that money laundering and illicit financial flows have disappeared from the South African economy. Rather, it reflects measurable institutional progress in tackling these issues. But why is that progress so relevant to mining now and in the future?
Mining sectors around the world are struggling with illegal mining, illicit trafficking and organized crime networks. As seen with the “Zama Zamas” phenomenon in abandoned gold mines, illegal mining can generate substantial revenue for criminal syndicates. These syndicates often take advantage of weak AML systems to launder money and integrate illicit profits into the legitimate economy. Enhanced AML controls make it harder for these criminal networks to monetize their activities, thereby strengthening law enforcement deterrence and reducing illicit markets.
Global investors are increasingly incorporating ESG (environmental, social and governance) criteria into mining investment decisions. Poor AML performance may indicate broader governance risks, which could potentially disrupt capital flows. By addressing its AML vulnerabilities, South Africa is better positioned to attract investors who seek transparency, ethical governance and reduced exposure to reputational risk.
The FATF reform process emphasized not only better reporting and monitoring, but also investigation and prosecution of complex money-laundering cases. In the context of mining, this means that prosecution and asset confiscation actions – such as confiscation of illegal coal mining income – become more feasible as law enforcement capabilities are strengthened. Over time, this creates a deterrent effect that makes resource-related financial crime less attractive.
Despite delisting by FATF, South Africa's AML journey is not complete. FATF requires continued demonstration of effective results – including successful prosecution and sanctions – to avoid re-listing in future assessments.
The following three major challenges remain in the mining sector:
- Illegal mining and violent criminal syndicates (particularly in abandoned gold fields) continue to pose risks to both public safety and financial integrity.
- Incorrect invoicing in trade and illicit flows in mining exports still represent massive leakages of public funds.
- Cases that involve criminal, financial and corporate law – such as collusion between banks and smugglers – underline the need for constant vigilance.
To sustain progress, South Africa must strengthen AML capabilities in law enforcement, regulatory agencies and the private sector, particularly institutions involved in mining finance and trade.
South Africa's exit from the FATF gray list in 2025 represents meaningful institutional progress in combating money laundering and terrorist financing. For the mining industry, this achievement has multifaceted implications: it increases investor confidence, strengthens legal controls against illicit financial flows linked to mining, and aligns the country more closely with international standards that influence capital flows into the sector.
Previous cases involved illegal mining proceeds, gold smuggling networks and trade-based financial crimes. All of this serves to highlight the deep interconnectedness of mining and AML enforcement challenges. Ongoing reforms provide a foundation on which South Africa can protect an important economic sector from the corrosive effects of financial crime while positioning mining for sustainable and transparent future growth. 
Gordon Feller is a freelance mining writer.