The Common Monetary Area (CMA) has changed its regulations regarding electronic funds transfers (EFTs). The South African Reserve Bank (SARB) announced that the move was necessary to comply with anti-money laundering best practice, stating that 'our payment systems and processes must be aligned to enhance compliance with international standards.'

Understanding the CMA

The CMA is a financial alliance between South Africa, Namibia, Lesotho and Eswatini, aimed at boosting trade and economic growth across the 4 countries. Within the CMA, SARB plays a key role in setting monetary policies and foreign exchange regulations.

Under this agreement, our neighbours’ currencies – the Namibian dollar, Lesotho loti, and Swazi lilangeni – are valued 1:1 with the South African rand. So, within the CMA, these currencies are interchangeable with the rand at equal value.

Previously, banks processed cross-border payments within the CMA via an EFT. However, they've now shifted to using the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network, meaning these transactions are processed as international payments, which has an impact on processing times and fees.

Regulating EFT payments

SARB announced the changes in a statement released on 26 July 2024, to take effect from 30 September. All EFTs, debit or credit transactions between CMA countries are now treated as cross-border payments with stricter tracking and compliance requirements.

Although treating these payments as domestic transactions in the past allowed for efficient, less expensive services, the system had vulnerabilities. The new measures aim to meet international financial crime standards and address recommendations from the Financial Action Task Force (FATF), an intergovernmental organisation formed in 1989 to combat money laundering. The FATF has urged South Africa to tighten its controls by January 2025, so that it can be removed from the FATF greylist.

Under the new rules, banks in the CMA now process all payments through the Southern African Development Community real-time gross settlement (SADC-RTGS) system, which was previously reserved for high-value transactions only. Debit orders are also affected – you must now initiate them from accounts based in the same country as the company or individual being paid, offering added protection through local oversight.

SARB and the CMA Cross-border Payments Oversight Committee have noted the potential impact on banking times and costs, and assured bank clients that they are working to minimise disruptions. The committee aims to balance the necessary regulatory updates with the need for affordable, efficient payment services within the CMA.

FATF President Elisa de Anda Madrazo said that fighting financial crime is not just an ethical imperative, but also a necessity for the economy. She stressed that financial integrity drives poverty reduction and empowers people while stimulating economic growth, so the changes should enhance both integrity and financial inclusion.

How will this affect Nedbank clients?

The Payments Association of South Africa is overseeing changes in cross-border payments within the CMA. Some payment processes in the CMA will not be affected – for example, internal EFTs within the same country will stay the same. You can still make EFTs between South African bank accounts and from Nedbank Namibia accounts to accounts held with FNB Namibia or Standard Bank Namibia.

The new system will not change cross-border or high-value payments within the Southern African Development Community through the SWIFT network.

As a Nedbank client, you should be aware of a few changes:

• South African Nedbank platforms like NetBank Business, the Corporate Payments System and the Money app will not support EFT payments to other countries in the CMA.
  
  
• If you receive money in a CMA country from accounts in another CMA country, you will now need to use the Money app, Online Banking, or our Global Transactional Banking platforms to make these transactions.