A new law, the Financial Intelligence Centre Act exemption, is set to make it easier for people to transfer small amounts of money across borders this year. Finance Minister Nhlanhla Nene signed the Financial Intelligence Centre Act on 5 June 2015 and the exemption comes into effect on 1 July 2015.
According to the exemption, people will be able to transfer up to R3 000 per day, and R10 000 in a month, without having to verify their identity, whether or not they are a South African citizen or resident, or a foreign national.
The Financial Intelligence Centre, said: “The Minister of Finance has approved an exemption for cross border remittances. The exemption is intended to reduce the regulatory obligations for financial institutions providing cross-border remittance services. This is to enable a reduction in the costs involved in remittances and to encourage remitters to use formal channels for fund transfers. At the same time, the intention is to reduce the risk of anonymous cross border transfers that would encourage money laundering and terrorist financing.”
This exemption is relevant to “banks, mutual banks, the Postbank, Ithala Development Corporation and money remitters,” explained the Financial Intelligence Centre.
Prior to the exemption, those wishing to transfer money had to provide their full name, date of birth, ID number and residential address in order to transfer money across the border.
Cross border transfers to Zimbabwe
Last week, the South African Reserve Bank (SARB) gave Econet Wireless, Zimbabwe’s largest telecommunications company, the go-ahead to offer cross border money remittance from South Africa to Zimbabwe through its EcoCash service.
According to a report, Econet said: “EcoCash and its South African partners have finally secured approval from the South Africa Reserve Bank to start a cross border remittance service from South Africa.”
Another report added: “The approval, which took over 18 months to secure, will come as a major relief for Zimbabweans working in South Africa, as it takes out the hassles and challenges of sending money to relatives. It will be as accessible, quick and convenient as making a ‘cash-in’ to EcoCash in Zimbabwe.”
Prior to the exemptions, informal channels were used to transfer money cross border as it was easier and cheaper than using the formal services available. However, with the new exemptions, transferring money will be easier and simpler than before.
According to a report, fees of 22% and higher are charged for transferring $200 (approximately R2 487.39 at today’s exchange rate (17 June 2015)).
FinMark Trade said: “This exemption will result in a reduction in the cost and less administrative work on the part of financial institutions. It will also encourage remitters currently using informal and risky channels to use formal channels thereby improving the lot of poor migrants and their families in the main corridors around South Africa.”
EcoCash is not yet operating in South Africa, but the company hopes to be operational within the next month.