South African banks, in the next month, will halt electronic fund transfer (EFT) services to Namibia, eSwatini, and Lesotho, restricting clients from transferring money to these Common Monetary Area (CMA) countries.
From September 4th, EFT services will be unavailable to South African customers wishing to send money electronically to these key Southern Africa Development Community nations.
The South African Reserve Bank (SARB) has announced that from September 30, EFTs, debit, and credit card payments between CMA countries will be classified as cross-border transactions.
“From 30 September 2024, low-value EFTs, debit, and credit payments between CMA countries—Eswatini, Lesotho, Namibia, and South Africa—will be considered cross-border transactions and will be subject to more stringent due diligence requirements,” SARB stated.
The announcement continued: “Previously, these low-value retail payments were treated as domestic transactions, with the four CMA countries and their participating banks processing them through South Africa’s domestic retail payment system. This system provided a cost-effective and efficient payment service to clients.
“However, to align with international standards, our payment systems and processes need to be regularised. This will not only enhance compliance but also prevent misuse, such as money laundering, and improve our ability to detect such activities.”
This move is part of South Africa’s broader efforts to implement recommendations from the Financial Action Task Force (FATF) aimed at strengthening anti-money laundering measures, combating the financing of terrorism, and addressing proliferation financing.
“Regularising these low-value retail payments will support our objective of exiting the FATF grey list by January 2025,” SARB added.
The discontinuation of services includes payments via banks’ digital platforms, processing stop orders, and settling payments for current beneficiaries. All beneficiaries and recipients will be removed from existing accounts, preventing scheduled future payments due to an automated deletion process.
The new regulation will impact both savings and investment accounts.
Standard Bank, one of the major banks, has advised clients, as per CMA regulators’ instructions, to “regularise low-value cross-border transactions.”
The bank announced it is developing alternative solutions to facilitate cross-border payments. “We are working on a new and improved Online Banking platform to support digital cross-border payment solutions, which will be available soon. We will keep you updated on its progress,” said Standard Bank.
