NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, June 9, 2015

The cost of sending money from South Africa to people in neighbouring countries or abroad is set to drop.

Last week Finance Minister Nhlanhla Nene approved a long-awaited exemption from legislation for cross-border remittances.

The exemption from the Financial Intelligence Centre Act will reduce the regulatory requirements relating to combating money laundering and the financing of terrorism, which banks and other qualifying institutions must meet.

Financial institutions will no longer be required to obtain proof of residence or a South African tax number for cross-border transactions, provided the amount is less than R3 000 a day or R10 000 in a calendar month. This is according to Brendan Pearce, head of programmes at FinMark Trust, an organisation that monitors financial inclusion.

The trust expects that the exemption will result in a reduction in the cost of transferring money across the border and less administrative work on the part of financial institutions.

The exemption was published in the Government Gazette on June 5 and will come into effect at the beginning of July, according to the Financial Intelligence Centre. The exemption will apply to all banks, mutual banks, the Postbank, Ithala Development Corporation and money remitters.