South African banks will next month stop electronic fund transfer (EFT) services to Namibia, eSwatini, and Lesotho, preventing clients from moving money to these Common Monetary Area (CMA) countries.

Beginning September 4th, EFT services will be unavailable to the bank's South African customers who electronically transmit money to these key Southern Africa Development Community countries.

According to an announcement by the South African Reserve Bank (SARB), EFTs, debit and credit card payments made between CMA countries would be considered cross-border payments as of September 30.

"As of 30 September 2024, low-value EFTs, debit and credit payments made between CMA countries, namely Eswatini, Lesotho, Namibia and South Africa, will be treated as cross-border transactions and subjectto greater due diligence requirements," SARB said in a statement.

It added: "Previously, these low-value retail payments were treated as domestic payments, with the four CMA countries and their participating banks processing the transactions via South Africa’s domestic retail payment system. This provided a low-cost, effective and efficient payment service to their clients.

"However, to enhance compliance with international standards, our payment system and processes must be regularised. Doing so will, along with other benefits, prevent criminals from having easy access to EFT payments to launder funds and ensure this misuse can be identified more effectively when it occurs."

According to the bank, this step also forms part of South Africa’s efforts to address several recommendations madeby the Financial Action Task Force (FAFT) to strengthen our anti-money laundering,countering the financing of terrorism and combating proliferation financing regime.

"Regularising these low-value retail payments will help us to achieve our goal of exiting the FATF greylist by January 2025," said SARB.

The services that will be stopped include making payments on banks' digital platforms, processing stop orders, and paying current beneficiaries.

All beneficiaries and recipients will be removed from existing accounts, preventing clients from making scheduled future payments due to an automated deletion process that will be conducted.

The new regulation affects both savings and investment accounts.

Standard Bank one of the big four banks has since cautioned clients as directed by CMA regulators "to regularise low value cross border transactions".

In the notice, the bank stated that it is developing alternative banking solutions for its clients to enable cross-border payments.

“We are developing a new and improved Online Banking platform to support your digital cross-border payment solutions and it will be made available shortly. We will keep you informed as and when these become available,” said Standard Bank.

CORRECTION:

It has, since publication of this story, emerged that this issue impacts all banks and is not confined to Standard Bank. Standard Bank was responding as directed by CMA regulators to regularise low value cross border transactions. The story has been updated with the additional information.