In 2021, South Africa was assessed as Largely Compliant with Recommendation 16 of the FATF Standards, which governs the traceability of wire transfers. This recommendation requires that all cross-border electronic fund transfers be accompanied by accurate originator and beneficiary information, and that financial institutions detect and act on missing data to prevent misuse for money laundering or terrorist financing. Although the country had implemented specific regulations and directives to enforce these requirements, some weaknesses remained in supervision and coverage across sectors.

Legal & Regulatory Developments

South Africa enforces its wire transfer obligations primarily through the Financial Intelligence Centre Act (FIC Act), supported by specific directives from the South African Reserve Bank (SARB). The most notable of these is Directive 1 of 2015, together with an accompanying Interpretation Note, which operationalises FATF’s expectations within the national payment system. These instruments set out clear requirements for financial institutions to ensure that originator and beneficiary data are captured, transmitted, retained, and made available to competent authorities.

The SARB’s Prudential Authority oversees compliance among banking institutions, while the Financial Surveillance Department supervises foreign exchange transactions and money transfer operators.

The supervisory framework is backed by sanctions mechanisms for non-compliance, and larger banks were found to have mature internal controls to manage wire transfer risks. These institutions generally demonstrated strong adherence to the requirements, supported by regulatory guidance and periodic engagement with authorities.

Implementation Challenges

Despite having a strong legal base, South Africa faced challenges in ensuring uniform implementation across the financial sector. Monitoring and enforcement were found to be inconsistent, particularly among smaller financial institutions and less-regulated actors such as certain money value transfer services and virtual asset service providers. These gaps were exacerbated by resource limitations among supervisory bodies, which reduced their capacity to conduct risk-based inspections outside of the core banking sector.

The effectiveness of compliance by intermediary institutions was also not uniformly assessed. While the law requires that these entities retain wire transfer information throughout the transaction chain, oversight mechanisms to ensure adherence were not fully established at the time of the evaluation. Some parts of the financial ecosystem, including certain digital financial service providers, were not yet fully brought under Recommendation 16’s specific operational requirements, though they remained subject to general suspicious transaction reporting duties under the FIC Act.

Conclusion

South Africa has made considerable progress in strengthening the traceability of wire transfers, establishing enforceable regulations and a supervisory structure aligned with FATF Recommendation 16. The legal framework provides a solid foundation, and implementation is strong among larger financial institutions. However, inconsistent enforcement, incomplete coverage of some financial intermediaries, and supervisory resource constraints continue to limit full effectiveness. The FATF’s rating of Largely Compliant reflects the country's advancement toward global standards, while recognising that further refinements are needed to achieve system-wide robustness.