House Committee Moves to Overhaul U.S.-South Africa Relationship Ahead of Potential FATF Delisting

U.S. pressure is mounting on Pretoria. The House Foreign Affairs Committee cleared a consequential piece of legislation on July 22 aimed at reevaluating America’s longstanding relationship with South Africa. Approved with bipartisan support, the U.S.-South Africa Bilateral Relations Review Act would direct the president to assess whether South Africa is undermining U.S. national security or foreign policy objectives.

The vote came just days before this week’s critical site visit to South Africa by the Financial Action Task Force (FATF), a key procedural step in the country’s potential removal from the international anti-money laundering watchdog group’s notorious “grey list.” Despite concerns from civil society groups regarding the country’s sustained money laundering, corruption, and terror financing risks, South Africa seeks to exit FATF’s grey list as soon as the group’s upcoming plenary session in October.

Washington Moves To Isolate the ANC

The U.S.-South Africa Bilateral Relations Review Act comes as the Trump administration is increasingly isolating South Africa’s historically dominant African National Congress (ANC), whose candidates have won every presidential election since the end of apartheid. In February, President Trump issued an executive order ceasing all financial assistance to South Africa. In March, Washington declared Pretoria’s ambassador to the United States persona non grata. The country’s special envoy later had his visa application denied in May, and Treasury Secretary Scott Bessent skipped the latest Group of 20 finance ministers meeting in South Africa earlier this month.

Like previous versions of the bill, the draft approved last week requires a comprehensive review of the U.S. bilateral relationship with South Africa due to its growing support for China, Russia, and Iran. What makes this version even more notable, however, is the requirement that the president prepare a list of South African officials who could be subject to sweeping Global Magnitsky sanctions for corruption and human rights abuses. For years, ANC officials have enriched themselves at the public’s expense — and many remain in power today.

The China-South Africa Corruption Nexus

A major concern driving the U.S.-South Africa Bilateral Relations Review Act is the ANC’s entanglement in large-scale corruption schemes. For instance, once a symbol of national progress and economic potential, South Africa’s rail network has largely collapsed under the weight of mismanagement and graft. This is due in large part to the corrupt dealings between ANC officials and China’s state-owned railway company CRRC. Backroom dealing led to the exchange of defective, poor-quality infrastructure, and cost the people of South Africa hundreds of millions of dollars.

Beyond China, Congress is equally worried about South Africa’s rampant domestic corruption. In July, for instance, a provincial police commissioner accused South African Police Minister and senior ANC official Senzo Mchunu of participating in an organized crime syndicate and interfering in investigations of cartel-linked, politically motivated murders. The South African civil society initiative Unite 4 Mzansi estimates that between 2014 and 2019 alone, corruption cost South Africa upwards of 1.5 trillion rand — or approximately $83 billion in today’s money.

FATF Should Hold South Africa Accountable

FATF grey-listed South Africa in 2023 due to systemic deficiencies in its anti-money laundering and counter-terrorism financing regime. While the country has addressed some of these concerns on paper, enforcement remains limited — especially in complex corruption and financial crimes cases.

Meanwhile, South Africa continues to serve as a key hub for terrorist financing. The Hamas-linked Al-Quds International Foundation operates a South African branch, while local businesses and individuals finance ISIS affiliates operating in the Democratic Republic of the Congo and Mozambique. In 2022 alone, the U.S. Treasury Department designated four ISIS-affiliated business associates and eight ISIS-affiliated enterprises operating out of South Africa. The country also facilitates illicit financial flows through its illegal gold mining sector and drug trafficking through its ports.

FATF members should continue to hold Pretoria to account by keeping South Africa on the grey list come October. Meanwhile, Congress should push the Trump administration to wield Global Magnitsky sanctions against ANC-linked officials responsible for corruption and human rights abuses.  

Max Meizlish is a senior research analyst for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD), where Amelia Melo is an intern. For more analysis from Max and CEFP, please subscribe HERE. Follow Max on X @maxmeizlish. Follow FDD on X @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.