By Delisa Thwala
The Central Bank has notified the public and business community to expect seamless transactions within the CMA, particularly in South Africa.
This was revealed by the Governor, Dr. Phil Mnisi, who engaged his counterpart from the South African Reserve Bank (SARB) Lesetja Kganyago to address concerns raised regarding the recent regularization of cross-border transactions in the Common Monetary Area (CMA) region.
Worth noting is that the CMA region comprises South Africa, Namibia, Lesotho, and Eswatini.
“For the past two weeks, the CBE and commercial banks have received numerous complaints, largely regarding the increased time it takes to make payments within the region and the additional transaction fees. Most affected were transactions between Eswatini and South Africa,” said the Governor.
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He further said the CBE liaised with the SARB to engage South African banks to allow payments to be sent and received within the usual and expected speed and cost, thereby guaranteeing the free flow of funds within the region.
“As of October 4, 2024, the SARB implemented these relaxations, through a directive to South African banks, which will mark the start of seamless transactions between Eswatini and South Africa,” he said.
Mnisi further said, individuals, transitioning below R1 000 000 (E1 million) flowing into South Africa, will no longer be affected, provided that all the required details, including the purpose of the transaction, are clearly and unambiguously disclosed in the payment customer transfer message.
“ For corporates, its transactions below R5 000 000 (E5 million) flowing into South Africa,” said Mnisi.
Worth mentioning is that The CMA is responsible for overseeing the payment systems and initiatives in the CMA region to ensure their safety, efficiency and compliance
with international standards.
Over the past few years, all four CMA countries processed cross-border payments within the CMA via South Africa’s domestic retail payment system, thereby offering a low-cost, effective and efficient payment service to their clients.
However, these payments were treated as domestic transactions in South Africa and needed to be regularised to comply with FATF Recommendation 16 in respect of cross-border payments.
FATF Recommendation 16 aims to prevent criminals from having unfettered access to EFTs for moving their funds and tries to detect such misuse when it occurs.
Specifically, it aims to ensure that basic information on the originator and beneficiary of EFTs is immediately available.
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The potential challenge in regularising these payments was that South Africa’s domestic retail payment system has limitations regarding carrying all the required information about the originator and beneficiary as per the FATF Recommendation 16 requirement.
This implied that these cross-border payments did not comply with FATF Recommendation 16 unless changes were made to South Africa’s domestic retail payment system.
In this regard, in 2019, the four biggest South African banks and a branch of a foreign bank, in agreement with their subsidiaries in the CMA and one bank in Namibia, developed an interim solution as a control measure to comply with.
