Finance and Banking

Commercial Banks Authority

South African banking regulations, controlled by the Banks Act, 1990, rank with the best in the world. The sector has long been rated among the top 10 globally. The central bank is the South African Reserve Bank. The major banking groups are ABSA (with a major stake held by Barclays), First Rand, Nedbank and Standard Bank each with considerable assets, own retail distribution and electronic banking networks, including internet banking facilities. In the last couple of years many foreign banks and investment institutions have set up operations in South Africa. A variety of financial services are offered.

Johannesburg Securities Exchangee

The Johannesburg Securities Exchange (JSE) is the one of the largest exchanges in the world by market capitalisation (some R3.3-trillion as of September 2005). The JSE Securities Exchange South Africa was previously licensed in terms of the Stock Exchanges Control Act, 1985, and the Bond Exchange of South Africa and the South African Futures Exchange were licensed in terms of the Financial Markets Control Act, 1989. The Securities Services Act 2004 has now repealed both these Acts, which regulates those exchanges and the trading in securities.

World-class systems allow the JSE to offer leading technology, surveillance and settlement on a T+5 basis. The JSE's automated trading, settlement, transfer and registration systems; rules and their enforcement are based on global best practice, equal to any in the world. The main function of the JSE is to facilitate the raising of primary capital by re-channelling cash resources into productive economic activity, and building the economy while enhancing job opportunities and wealth creation. The JSE also provides an effective price determination facility and price risk management mechanism.

The JSE is an essential cog in the functioning of South Africa's economy, providing an orderly market for dealing in securities and thereby creating new investment opportunities in the country. As part of its global vision, the JSE entered into a strategic alliance with the London Stock Exchange (LSE) consisting of a Business Agreement and a Technology Agreement. The deal comprises the provision of core technology services by the LSE to the JSE and aims to achieve easier access to each others markets for both member firms and issuers.

Money Laundering / Financial Intelligence Act
As part of South Africa’s commitment to combating money laundering and the various criminal activities associated with it, money- laundering legislation was recently introduced in the form of the Prevention of Organised Crime Act (POCA) and the Financial Intelligence Centre Act (FICA).

POCA and FICA apply to the proceeds of any unlawful activity, which is wide enough to cover issues such as exchange control contravention, tax evasion and competition law contravention.

FICA imposes a duty on each person carrying on business and every employee of that business to report to the Financial Intelligence Centre (the Centre) any knowledge or even a suspicion that the business is used in any way for money laundering purposes or that the business has received or is about to receive the proceeds of unlawful activity or that the business is a party to a transaction which:

    * Facilitates the transfer of the proceeds of an unlawful activity; or
    * Has no apparent business or lawful purpose; or
    * Is relevant to tax evasion or attempted tax evasion.

If a professional advisor is a party to any transaction or is consulted on any transaction which it suspects involves proceeds of unlawful activity or suspects that it is being used for money laundering purposes, it and its employees are obliged to report to the Centre, subject to legal privilege. Although FICA preserves legal privilege, it overrides the duty of confidentiality. Broadly, privilege protects from disclosing any communications between attorneys and their clients, which are made in confidence for the purpose of enabling anyone who reports a suspicion or knowledge to the Centre from disclosing that fact to anyone, including the client.

Apart from the reporting duties, which apply to all businesses, certain types of businesses termed, accountable institutions, have additional compliance obligations. Accountable institutions must establish and verify the identity of all new and existing clients and keep a record of its clients and the transactions entered into with them.

National Credit Act

On 1 June 2007, the new National Credit Act, or NCA, comes into full effect. The NCA replaces the Usury Act of 1968, the Usury Act Exemption Notice of 1992, and the Credit Agreements Act of 1980. The National Credit Act brings South Africa in line with similar consumer legislation in the UK, USA, Australia, Ireland, Singapore and Switzerland. The new transparency requirements are intended to  promote openness and competition and contribute to further growth and prosperity in South Africa.

From 1 June 2007, The NCA aims to:


  • Help prevent consumers from falling into a position of over-indebtedness;
  • Promote a fair, non-discriminatory credit market;
  • Minimise the granting of reckless credit;
  • Regulate the costs of credit;
  • Attempt to increase access to credit;
  • Attempt to eradicate the exploitation of consumers by unscrupulous lenders;
  • Provide greater transparency and choice in favour of the consumer seeking credit;
  • Provide consumers with the option to engage in an official language of their choice;
  • Enforce disclosure relating to the total cost of credit to the consumer;
  • Provide more information to the consumer prior to engaging in a credit agreement;
  • Provide consumer education and awareness relating to credit;
  • Regulate consumer credit information held by institutions such as credit bureaux; and
  • Provide a regulated mechanism of debt restructuring for consumers in distress.

South African banking

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