As South Africa moves into its short period of chill we like to call “winter”, the various regulators are keen to keep us busy! Busy people are always warm, so we recommend you get a head start on the legislative and economic activity noted this month.
Draft national AI policy
The Department of Communications and Digital Technologies published South Africa’s Draft National Artificial Intelligence (AI) Policy for public comment and then promptly withdrew it. Why? Well, naturally, it had been crafted using AI, but the references hadn’t been checked, and it had a few errors!
THE FINANCIAL SECTOR CONDUCT AUTHORITY (FSCA)
Warnings – back in the news
It seems the FSCA took a short break from issuing warnings but is now back on track. It has issued public warnings highlighting ongoing risks to consumers from unauthorised financial activities and impersonation scams. These include cases of individuals falsely posing as licensed firms such as PWM Wealth Management (Pty) Ltd, Fairtree Asset Management (via Telegram groups), and Prime Investments, as well as the solicitation of funds for forex trading by unauthorised parties linked to Cloud 9 Investments SA (Pty) Ltd and Shaakirah Johnson.
Across all matters, the FSCA reiterates that fraudsters are increasingly using social media and trusted brand identities to promote schemes, often promising unrealistic returns or pressuring investors to act urgently. Consumers are urged to verify the authorisation status of entities with the FSCA and remain vigilant against unsolicited offers, upfront fee requests, and vague investment information.
Continuous Professional Development – 2026
We’re sure you don’t need a reminder since you’re reading this article and are probably well past the necessary hours, but if you need to help a friend, remind them they have until midnight on 31 May to complete their hours and until 30 June to update their Competence Register.
Perhaps our colleagues at AC Develop can assist if you have a straggler or two…
FINANCIAL INTELLIGENCE CENTRE (FIC)
FIC opens 2026 Risk and Compliance Return (RCR) platform for submissions
The FIC has announced that the online platform for the submission of the 2026 RCR is officially open. In a notice issued on 5 May 2026, the FIC urges all specified accountable institutions, as defined under Directive 11 of 2026, to submit their RCRs timeously via the dedicated online portal.
Directive 11, published on 31 March 2026, makes electronic submission of the 2026 RCR mandatory for a range of accountable institutions listed in Schedule 1 of the Financial Intelligence Centre Act (FICA). These include, among others, credit providers (excluding banks), casinos, non-casino gambling institutions, crypto asset service providers, high-value goods dealers, and certain other designated businesses.
The 2026 RCR is significant in that it spans three reporting years (2023–2026) and includes a sector-specific component. It focuses on institutions’ understanding of their exposure to money laundering, terrorist financing, and proliferation financing risks, as well as the effectiveness of their risk-based control measures.
Key submission deadlines vary by sector:
- Most sectors (including credit providers, crypto asset service providers, and casinos) must submit by 30 June 2026 (17:00).
- Certain sectors, such as high-value goods dealers and non-casino institutions, have until 31 July 2026 (17:00).
Importantly, submissions can only be made via the FIC’s RCR online platform. Institutions are encouraged to consult Draft Public Compliance Communication 125, which provides practical guidance on completing and submitting the return, as well as sample questionnaires available on the FIC website.
The FIC has also reminded accountable institutions to regularly monitor their goAML message boards for official communications, updates, and potential follow-ups related to the 2026 RCR process.
For further assistance, institutions can contact the FIC Compliance Contact Centre on 012 641 6000 (option 1).
PRUDENTIAL AUTHORITY (PA)
Updated reporting requirements of banks
The PA issued Directive D2/2026, updating the reporting requirements applicable to auditors of banks under Regulation 46 of the regulations relating to banks.
The Directive clarifies which Banks Act (BA) returns must be audited, reviewed, or subject to limited assurance engagements, and aligns the reporting framework with amendments to the banking regulations that became effective on 1 July 2025. It replaces Directive 2 of 2024.
The updated framework sets out the assurance requirements for a range of prudential returns, including:
- audited year-end BA returns;
- reviewed year-end BA returns;
- limited assurance reports on risk returns and internal model-based risk returns; and
- limited assurance reporting on daily market risk returns.
For foreign operations, equivalent reporting obligations apply to BA 610 returns and associated risk lines.
The Directive also reinforces the requirement that auditors use the PA and Independent Regulatory Board for Auditors-approved illustrative reporting formats when submitting reports. Institutions must ensure that both management and external auditors acknowledge receipt of the Directive and comply with the revised reporting matrix for financial years ending on or after 1 July 2025.
Draft exemption notice on payment activities
The PA, with the approval of the Minister of Finance, has issued a draft exemption notice clarifying the regulatory treatment of certain payment activities within South Africa’s national payment system. The proposal is a significant step in modernising the regulatory perimeter and supporting innovation in the payments ecosystem.
The draft notice exempts a defined set of payment activities from being classified as “the business of a bank” under the Banks Act, 1990. This means that non-bank entities (payment institutions) may conduct these activities without requiring a banking licence, provided they comply with prescribed conditions and regulatory oversight.
The exemption applies to a range of domestic payment services conducted as a regular feature of business, including:
- Issuance of e-money (including mobile money);
- Issuance of payment instruments;
- Acquiring of payment instructions;
- Payment services to third parties (payer and beneficiary services);
- Money remittance; and
- Clearing and settlement functions.
These activities may be conducted within both closed-loop systems (limited ecosystems) and open-loop systems (interoperable, multi-provider environments).
While exempted from banking classification, these activities remain subject to robust oversight by the South African Reserve Bank (SARB). The Reserve Bank will develop and implement a dedicated regulatory framework for payment institutions as well as oversee licensing, supervision, and participation requirements to ensure integration into clearing and settlement systems where applicable. This will include mandating compliance with National Payment System Act requirements and related directives. This reinforces a functional, activity-based regulatory approach rather than one based purely on institutional form.
The exemption is conditional on several prudential and consumer protection measures, including:
- Restriction of client funds: Funds held (e.g. e-money) must be used strictly for payment purposes and may not be used for lending or investment activities;
- No interest on balances: Customers holding e-money will not earn interest;
- Safeguarding of funds: Requirements will be imposed to ensure secure handling and redemption of client funds;
- Authorisation requirements: Open-loop participants must be authorised under the SARB framework, while closed-loop providers must be registered or sponsored; and
- System integrity: Payment instructions must be cleared and settled within regulated infrastructures and timelines.
This proposed exemption signals a continued shift toward enabling non-bank participation in payments, particularly fintechs and payment service providers, while maintaining regulatory safeguards. It’s aligned with global trends toward promoting competition and innovation in payments as well as expanding digital financial services (including e-money and mobile payments), all while implementing proportionate, risk-based regulation.
For financial institutions, the framework introduces both new competitive dynamics and opportunities for partnership with regulated payment institutions.
The draft exemption notice represents an important evolution in South Africa’s payments regulatory landscape. By formally carving out payment activities from the definition of banking but still embedding them within a tailored supervisory regime, the PA and SARB aim to strike a balance between innovation, financial stability, and consumer protection.
Stakeholders should closely monitor the finalisation of the regulatory framework and assess the operational, compliance, and strategic implications for their business models.
NATIONAL TREASURY (NT)
Moody’s Ratings revises South Africa outlook to positive, affirms Ba2 rating
Moody’s has revised South Africa’s sovereign outlook to positive from stable while affirming the country’s Ba2 long-term issuer ratings. The decision reflects improving fiscal performance, continued structural reform progress, and expectations of stronger medium-term economic growth.
Moody’s highlighted South Africa’s stronger-than-expected primary budget surplus for the 2025 fiscal year, estimated at around 1% of gross domestic product (GDP), supported by resilient revenue collection and disciplined expenditure management. The agency expects primary surpluses to increase gradually to approximately 2% of GDP by 2028, helping stabilise and eventually reduce government debt levels.
The ratings agency also cited improving investor confidence, declining government bond yields and reform momentum in the energy, logistics, and water sectors as key contributors to the positive outlook. Real GDP growth is forecast to improve to around 2% by 2028, compared to an average of 0.8% between 2023 and 2025.
Moody’s noted that South Africa’s removal from the Financial Action Task Force grey list has further strengthened investor sentiment and could support increased private-sector investment. However, the agency cautioned that structural constraints remain, including high debt-servicing costs, weak labour market conditions, and infrastructure challenges.
The agency indicated that a future upgrade would depend on sustained fiscal consolidation, continued reform implementation, and a credible downward trajectory in government debt. Conversely, weaker expenditure discipline, reduced reform momentum, or increased support for state-owned entities could return the outlook to stable.
For the financial services sector, the outlook revision is likely to be viewed positively as it signals improved sovereign credit stability, supports investor confidence, and may contribute to lower long-term funding costs if fiscal and reform progress is maintained.
INFORMATION REGULATOR (IR)
Annual PAIA report
A reminder that the annual PAIA report to the Information Regulator is due by 30 June.
Log in here, then proceed to complete your report if you’re the Information Officer or Deputy Information Officer and haven’t already.
A-PROOFED
The example of the Draft National Artificial Intelligence Policy being withdrawn is a perfect reminder that AI still can’t be trusted as a proofreading tool.
If you’re using AI to proofread your writing, we should probably talk. Not because AI is useless, but because it has a charming habit of sounding confident while quietly getting things wrong. That combination is fine for brainstorming. It’s not fine for anything where accuracy, credibility, or your professional reputation matters.
And this is where things get interesting. AI is brilliant at sounding polished. It can produce paragraphs that look authoritative, structured, and even elegant. What it can’t reliably do is detect when it has invented a reference, misquoted a source, or stitched together information that feels convincing but isn’t.
It doesn’t “know” accuracy in the way we assume it does. It predicts language that looks right, which isn’t the same thing as verifying whether something is actually correct.
This is why using AI as a proofreading tool is risky. It can improve flow and surface-level clarity, but it doesn’t verify logic, tone, or factual accuracy. It also can’t determine whether information is correct, whether arguments are consistent, or whether wording introduces ambiguity or unintended risk.
Human proofreading isn’t just about catching typos. It’s about judgement. It’s about understanding intent, spotting inconsistencies, and recognising when a sentence is technically correct but unclear, misleading, or open to misinterpretation. It’s the difference between “correct” and “credible”.
And credibility is where things start to matter. Especially in reports, proposals, policy documents, and anything that carries your name into the world. A small error might feel harmless in isolation, but stacked together, they create doubt. And doubt is expensive. It costs trust, clarity, and often opportunity.
This is the part people underestimate. AI can accelerate writing, but it can’t carry responsibility for it. It doesn’t care if your argument holds up under scrutiny. A human proofreader does.
That’s where my work comes in. I don’t just correct language. I check logic, flow, tone, consistency, and yes, the small details that AI tends to skim past while confidently insisting everything is “well-structured and accurate”.
So by all means, use AI. Let it help you draft, explore, and get started. But when it comes to final polish, the kind that stands up in boardrooms, regulatory environments, and investor communications, it helps to have a second pair of human eyes on it.
If you want your writing to sound polished, professional, and actually correct, I can help with that. And unlike AI, I won’t invent facts along the way.
083 657 3377 | kim@a-proofed.co.za
www.a-proofed.co.za
