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The federal bank in South Africa re-regulated guidelines for performing card transactions between domestic merchants and customer to keep intact AML compliance.
The Republic of South Africa has issued a regulation (South African Reserve Bank Act) to streamline the national payment system with regard to local card transactions. The changes in regulations were recently issued by the South African Reserve Bank (SARB) under the National Payment Systems Act (NPS) of 1998 directing card issuing companies, card acquirers, local businesses and acceptance service providers to comply with the new rules.
These providers must develop AML compliance programs that are in accordance with the guidelines stated in the Payment Clearing House Act, the South African legislation, and rules for settlement and clearing. As per the regulation, foreign card issuers cannot issue domestic cards if they are not registered with the national clearing system.
The Financial Surveillance Department has issued specific guidelines for individuals from an exchange control viewpoint. These recommendations are listed in the Currency and Exchanges Act in these words,
“Individuals with locally issued credit and/or debit cards are permitted to make foreign currency payments for small transactions (e.g., imports over the Internet) utilizing such credit and/or debit cards.”
The primary focus of this directive are transactions done between local businesses, which seem like cross-border transactions that can be used for money laundering and other financial crime. This happens since payment service providers are either operating from a foreign country or are not registered with the federal financial authority of South Africa.
Transactions taking place through foreign card acquirers or issuers (even if they are providing service in the country) reflect outside South Africa which means that state-enforced rules and regulations are not applicable to them.
That being said, the SARB with the new regulation is aiming at making payment between domestic customers and businesses regulated and less prone to money laundering risks.