Update on Regulation of Branchless Banking in South Africa

This update of CGAP’s 2008 "Notes on Regulation of Branchless Banking in South Africa" incorporates research conducted by CGAP in January 2010. It is one of 11 country updates produced by CGAP as a part of the G20 Access through Innovation (ATI) Sub-Group’s workplan.

The paper states that policy makers and regulators have been engaged in the development of branchless banking in South Africa. Developing a proportionate regulatory approach, however, to anti-money laundering/combating the financing of terrorism (AML/CFT) has not progressed much. Key points include:

• In 2004, the Minister of Finance issued Exemption 17, which reduced the documentary evidence needed to open an account;
• In 2006, the South African Reserve Bank issued Circular 6, which enabled non-face-to-face account openings for accounts meeting the requirements of Exemption 17, but subject to an even lower transaction limit;
• These exemptions allowed low-income individuals greater access to financial services, including savings;
• 2009 amendment to a law requires operators and distributors of mobile phones to perform full AML/CFT customer due diligence procedures on any person to whom they provide a mobile phone or SIM-card;
• This reduces the benefits of the AML/CFT measures and highlights the importance of interagency coordination.