South African banks to end EFT services to several countries

Starting with 4 September 2024, South African banks will suspend electronic fund transfer (EFT) services to Namibia, eSwatini, and Lesotho.

This change will prevent South African clients from sending money electronically to these countries within the Common Monetary Area (CMA). As of 30 September 2024, transactions such as low-value EFTs, as well as debit and credit card payments between CMA countries, will be reclassified as cross-border payments. The South African Reserve Bank (SARB) has announced that these transactions will be subject to increased due diligence measures. 

The SARB explained that previously, these transactions were handled as domestic payments within the CMA, processed through South Africa's domestic retail payment system. This system provided a cost-effective and efficient service for clients. However, to comply with international standards and enhance the ability to detect and prevent financial crimes such as money laundering, the payment system will be updated.

Aligning with the FATF 

The SARB's move aligns with South Africa's efforts to implement recommendations from the Financial Action Task Force (FATF) aimed at improving anti-money laundering, counter-terrorism financing, and combating proliferation financing measures. The adjustment is part of South Africa's strategy to exit the FATF grey list by January 2025. 

The suspension will affect various banking services, including payments via digital platforms, processing of stop orders, and payments to current beneficiaries. Affected beneficiaries and recipients will be removed from existing accounts, and clients will not be able to make scheduled future payments as existing records will be deleted automatically. It’s worth noting that both savings and investment accounts will be impacted by this new regulation. 

Standard Bank, one of the major banks, has notified clients about the changes and is working on alternative solutions to facilitate cross-border payments. The bank has indicated that it is developing a new online banking platform to support digital cross-border payment solutions and will provide updates as these solutions become available.