The Financial Surveillance Department (FinSurv) of the South African Reserve Bank has released a draft regulatory framework for Authorised Alternative Remittance Providers (ARPs), aimed at formalising informal cross-border remittance channels that currently operate outside the traditional banking and authorised dealer system.
For banks, Authorised Dealers (ADs), Authorised Dealers with Limited Authority (ADLAs), and other already licensed market participants, the draft ARP Manual does not amend existing regulatory frameworks governing those institutions. Instead, it introduces a new authorisation category for previously unsanctioned alternative remittance operators and sets out the conditions under which they may lawfully conduct low-value, peer-to-peer cross-border transfers under South Africa’s exchange control regime.
The draft Manual makes clear that the framework is designed for “alternative remittances” – defined as non-bank methods and channels used for transferring money and value cross-border, including hawala, Hundi, and similar informal networks.
Hawala and Hundi are trust-based value transfer systems, widely used in parts of Asia, the Middle East, and Africa, in which funds are made available to a recipient through a network of brokers without necessarily moving money physically across borders at the time of the transaction. Settlement between brokers typically occurs later through offsetting transactions or other balancing mechanisms, often outside the formal banking system.
Under the proposal, new and existing “unsanctioned alternative remittance businesses” may apply to FinSurv for authorisation as ARPs. These entities must be South African-domiciled limited liability companies registered with the Companies and Intellectual Property Commission and must meet fit-and-proper standards, including the absence of criminal records, no history of non-compliance with the Financial Intelligence Centre Act (FICA), and must be deemed fit and proper by FinSurv.
The framework expressly limits ARPs to facilitating cross-border remittance transactions for natural persons only; services to legal persons are not permitted. This confirms that the regime is aimed at retail, migrant-worker and peer-to-peer remittance activity, rather than corporate or commercial cross-border flows.
Exchange control at the core – with full FICA supervision
Although the draft framework refers to anti-money laundering (AML) and counter-financing of terrorism (CFT) objectives, its legal foundation lies in the Currency and Exchanges Act and the Exchange Control Regulations.
Regulation 10(1)(c) prohibits the export of capital from South Africa without prior permission from National Treasury. Through delegated authority, FinSurv administers this system and may grant permissions subject to conditions. The ARP regime represents a structured dispensation under which certain low-value cross-border remittances may be undertaken within defined limits.
At the same time, the Manual makes it clear that FinSurv is designated as supervisory body under section 45 of FICA in respect of ARPs. In practice, this means ARPs will be subject not only to exchange control permissions, but to the full suite of AML/CFT obligations under FICA applicable to ARPs as supervised accountable institutions. These include customer due diligence, implementation of a Risk Management and Compliance Programme (RMCP), sanctions screening, and reporting duties under FICA.
The Manual also references South Africa’s obligations as a member of the Financial Action Task Force (FATF), including Recommendation 14, which requires countries to ensure that money or value transfer services are licensed or registered and subject to effective oversight. Amendments to FATF Recommendation 1 in 2025, encouraging proportionate measures to support financial inclusion, are likewise noted.
Taken together, the framework reflects a convergence of exchange control administration and formal AML/CFT supervision over previously informal remittance channels.
Permitted channels and strict limits
The draft Manual sets out the remittance channels ARPs may apply to operate, together with strict monetary caps.
For single and recurring outward client remittances via ADs or ADLAs, transfers are limited to R5 000 per client per transaction per day, within an overall limit of R15 000 per client per calendar month. ARPs must deposit client funds into a bank account in the name of the ARP before onward transfer to an AD or ADLA for processing.
The Manual also allows “value transfer services”, where equivalent value is made available abroad through a foreign-domiciled agent. These are subject to the same R5 000 per day and R15 000 per month limits.
In addition, ARPs may use local cross-border money transporters – such as taxi, bus, or truck drivers – to facilitate the movement of rand-denominated banknotes to neighbouring SADC countries, subject to a cap of R25 000 per transporter per cross-border road trip.
The settlement of outstanding foreign agent invoices must be effected via an Authorised Dealer and is limited to R100 000 per transaction.
These quantitative caps underscore that the regime is calibrated for low-value, retail-level remittance activity rather than large-scale commercial transfers.
Prohibited activities
The framework imposes strict prohibitions. ARPs may not use third-party local field agents and must manage their operations through their own employees or beneficial owners. The use of virtual assets (crypto assets) is explicitly prohibited.
Other prohibited activities include the issuance of loans, purchase of debts, provision of financial services beyond those explicitly authorised, execution of domestic money or value transfers, and participation in any other unauthorised cross-border transmission activities. The authority granted to an ARP is neither tradable nor transferable.
Capital and segregation requirements
Successful applicants must maintain a prescribed amount of unimpaired capital in a segregated investment-type bank account. For new ARPs, the minimum capital is the higher of R50 000 or 10% of projected average monthly remittance volume for the first three years.
FinSurv may apply indicative default capital tiers in the first year, ranging from R100 000 for micro-ARPs to R500 000 for medium or large ARPs. In addition to this capital account, ARPs must open a separate segregated bank account for client funds, which may not be used for other business activities.
FinSurv retains discretion to review and adjust capital requirements based on disclosed transaction volumes and risk profile.
Reporting and supervision
ARP authorisation carries extensive reporting and compliance obligations. ARPs must submit prescribed monthly Excel-based reports detailing all cross-border money and value transfers conducted on behalf of clients, regardless of amount. These reports must categorise transactions under specified codes, such as gifts, migrant worker remittances, and foreign national contract worker remittances.
From an AML perspective, ARPs must implement and maintain a compliant RMCP in terms of section 42 of FICA, screen employees and clients against the targeted financial sanctions lists and retain records for prescribed periods. Copies of suspicious and threshold transaction reports submitted to the Financial Intelligence Centre must be retained and submitted to FinSurv, together with the prescribed monthly reporting.
Additional ongoing governance requirements include annual audited financial statements, annual money laundering and terrorist financing risk returns accompanied by a managerial comfort letter, biannual confirmation of AML compliance officer details and authorised signatories, and periodic submission of bank account statements.
FinSurv, designated as supervisory body for ARPs under both the Exchange Control Regulations and FICA, retains inspection and enforcement powers. These include the authority to demand documentation, require remedial action, commission external audits at the ARP’s expense, curtail activities, or suspend or withdraw authorisation in cases of non-compliance.
Implications for the formal market
For existing ADs and ADLAs, the draft ARP regime does not introduce new licensing categories or amend existing manuals. However, ARPs will necessarily interact with ADs and ADLAs to process cross-border transfers and settle foreign agent balances, which may result in onboarding of ARPs as clients and associated due diligence considerations.
More broadly, the framework signals a supervisory intention to bring informal cross-border remittance corridors within the exchange control and AML/CFT perimeter. By creating a defined, tightly controlled pathway for alternative remittance operators, FinSurv is seeking to regularise activity that may previously have operated without formal authorisation.
Deadline to comment
FinSurv has invited interested parties to comment on the draft framework by 31 March 2026. The final contours of the regime will depend on the outcome of the consultation process.
