• What’s new? The Financial Action Task Force (FATF), the world’s all-powerful financial crimes watchdog, just removed South Africa and Nigeria from its “grey list” at its October 2025 plenary.
• Why? Both countries (apparently) made “significant progress” in fixing their anti-money laundering (AML) and counter-terrorist financing (CFT) homework, which they were first assigned back in February 2023.
• Why should tech care? This is huge. Being on the grey list was a nightmare for the tech ecosystem. It meant higher costs, painful due diligence for VCs, and — most critically — global banks “de-risking” and cutting off the correspondent banking relationships that cross-border fintechs rely on to exist. Delisting, in theory, hits the reset button on that.

Graduation from Remedial Compliance

Let’s be clear: the FATF “grey list” (or “jurisdictions under increased monitoring,” in its preferred bureaucratic parlance) isn’t the “blacklist.” That’s reserved for non-cooperative pariahs like North Korea. The grey list is more like regulatory probation; it’s the list for countries that promise they’ll “work with the FATF” to fix their “strategic deficiencies.”

For the past two years, South Africa and Nigeria have been on that probation. For any US VC looking at a deal in Lagos, or a London-based bank providing services to a Cape Town payments startup, that “grey” status was a flashing red light. It meant every transaction was suspect, every compliance check was deeper, and the perceived risk was sky-high.

Now, the Paris-based arbiter of financial hygiene has declared that both countries have, in effect, finally handed in their overdue assignments. The FATF “welcomes” their “significant progress” and has given them a passing grade, graduating them back into the fold of (mostly) trusted jurisdictions. Burkina Faso and Mozambique also got the nod, while neighbours like Kenya, Angola, and Cameroon remain firmly on the list, still working through their own action plans.

What Did They Actually Fix?

So, what “significant progress” was enough to satisfy the FATF? 

Both countries had a common, glaring problem: Beneficial Ownership (BO). The FATF is obsessed — rightly so — with knowing who really owns a company. Anonymous shell companies are the vehicle of choice for launderers, oligarchs, and sanctions evaders. Both South Africa and Nigeria had to prove they were building and maintaining databases of accurate and timely beneficial ownership information and, crucially, had “applied sanctions for breaches” of these new rules.

Beyond that, each country had its own homework:

• For South Africa: The FATF noted a “sustained increase” in investigations and prosecutions of complex money laundering. They also got better at supervising so-called “Designated Non-Financial Businesses and Professions” (DNFBPs). That’s the polite term for real estate agents, lawyers, and casino operators — sectors notoriously used to wash dirty cash.
• For Nigeria: The country (finally) completed its national money laundering risk assessment. Its Financial Intelligence Unit (FIU) is now “demonstrating an increase in the dissemination of financial intelligence” to law enforcement, who are, in turn, “demonstrating a sustained increase” in investigations. In short, the different government bodies are finally talking to each other.

The Real-World Impact for Tech

This bureaucratic box-ticking has massive, real-world consequences for startups and investors.

For VCs: A Headwind Removed

The 2023 grey-listing couldn’t have come at a worse time, landing just as the global VC funding winter was setting in. It gave nervous Limited Partners (LPs, the people who fund the VCs) in Europe and the US another concrete reason to be wary of African investments. So far this year, Nigerian startups have secured one of their lowest funding levels on record, an unprecedented downturn that places the country behind regional peers like Egypt, South Africa, and Kenya. This decline, which began last year, is largely attributed to Nigeria’s worsening macroeconomic conditions, forcing many local startups to operate on shoestring budgets. While the recent regulatory upgrade offers hope for a reversal, analysts note that Kenya — which remains on the FATF list — has still attracted significantly more tech funding this year, suggesting that regulatory challenges were not the only obstacle to investor confidence.

“Every diligence process for the last two years has had an extra, painful chapter: ‘FATF Risk’,” an Africa-focused VC familiar with the matter told Launch Base Africa. “You had to price in the risk that your portfolio company could suddenly lose its banking partner. Removing that risk makes deals much simpler. It moves the conversation back from ‘is this country safe?’ to ‘is this a good company?’”

For Fintechs: Re-Opening the Pipes

The single most dangerous side-effect of the grey list was “de-risking.” While the FATF explicitly states it “does not call for… de-risking, or cutting-off entire classes of customers,” that’s exactly what risk-averse global banks do.

Why would a major bank in New York or London maintain a correspondent banking relationship (the “pipes” that move money internationally) with a Nigerian bank in a “high-risk” jurisdiction, when the compliance headache is massive and the fines for getting it wrong are astronomical?

They don’t. They simply cut ties. This was an existential threat for Africa’s booming payments and remittance sector. Fintechs suddenly found their global partners charging exorbitant fees or pulling out entirely, severing their connection to the global financial system.

This delisting is the “all-clear” signal they’ve been waiting for. It allows them to go back to those global banking partners and say, “The watchdog says we’re clean.” It should, over time, lower transaction costs and reopen doors that had been slammed shut.

Don’t Pop the Champagne Just Yet

While this is unequivocally good news, nobody should expect an overnight miracle.

1. Reputation Lags: The stigma of the grey list takes time to fade. Global banks are giant, slow-moving creatures. Their internal risk models and compliance departments won’t update their country ratings overnight.
2. FATF is Always Watching: The FATF’s statement isn’t a “congratulations, you’re done.” It’s a “congratulations, now keep doing it.” Both countries must “continue to work… to sustain its improvements.” Backsliding is always a risk.
3. The “Fix” Means More Red Tape: The “progress” that got them delisted means more regulation, not less. Startups now have to actually comply with these new beneficial ownership databases and enhanced supervisory checks. The hope is that it’s now predictable, risk-based regulation, not the chaotic, panicky kind.
4. A Tough Neighbourhood: With Kenya, Angola, and others still on the list, pan-African expansion remains a compliance minefield. A fintech in Lagos may find it easier to bank in London, but expanding to Nairobi will still present the same old grey-list headaches.

The delisting isn’t a finish line. It’s the end of a particularly punishing regulatory sprint. For the tech ecosystems in South Africa and Nigeria, it moves the burden from a national problem to an individual one. The world is no longer asking, “Is Nigeria high-risk?” It’s asking, “Is your startup high-risk?”

For the first time in two years, that’s a question they can answer on their own terms.