A seismic shift in cross-border payments is imminent as South African banks prepare to halt electronic fund transfers (EFTs) to neighboring countries Namibia, eSwatini, and Lesotho. The move, effective September 4, is a direct response to regulatory directives aimed at bolstering anti-money laundering measures within the Common Monetary Area (CMA).
The South African Reserve Bank (SARB) has reclassified low-value EFTs, debit, and credit card payments between CMA member states as cross-border transactions, necessitating enhanced due diligence procedures. This decision, while intended to curb financial crime, will disrupt the seamless flow of funds that has long characterized the region.
“Previously, these low-value retail payments were treated as domestic payments,” explained the SARB. “However, to enhance compliance with international standards, our payment system and processes must be regularised.”
The South African central bank’s directive to halt all digital transfers to Namibia, Lesotho and Eswatini has far-reaching implications for individuals and businesses. EFT services, including payments made through digital platforms, stop orders, and recurring transfers, will be discontinued. Existing beneficiaries will be automatically removed from accounts, forcing customers to reconfigure their payment arrangements.
Standard Bank, one of South Africa’s largest financial institutions, has issued a cautionary notice to clients, advising them to prepare for the upcoming changes. The bank is concurrently developing alternative online banking platforms to facilitate cross-border payments.
While the measures may inconvenience many, the SARB is steadfast in its commitment to addressing the recommendations of the Financial Action Task Force (FATF) and exiting the FATF greylist by January 2025. The transition period until September 4 will afford individuals and businesses ample time to adjust to the new payment landscape.
As the deadline looms, the South African financial sector and the public at large are grappling with the potential impact of this regulatory overhaul. The coming months will be crucial in determining the effectiveness of the new measures and their consequences for regional trade and economic integration.