The Financial Intelligence Centre (FIC) has opened a second round of consultation on its updated guidance on the interpretation of “money or value transfer service providers” (MVTSPs), which are accountable institutions in terms of the Financial Intelligence Centre Act (FICA).
MVTSPs include natural and legal persons that carry on the business of transferring money or value as a commercial service. The term “money or value transfer” refers to accepting cash, electronic funds, or other stores of value and paying a corresponding sum to a beneficiary through various methods.
The Centre published draft Public Compliance Communication 118 in December 2022 to provide for the amendment to the definition of an MVTSP (item 19 of Schedule 1 to FICA).
The aim of the PCC is to ensure MVTSPs understand their role and obligations under FICA. By clarifying definitions, registration processes, reporting duties, and supervision mechanisms, the document seeks to enhance compliance with measures aimed at combating money laundering, terrorist financing, and proliferation financing (ML/TF/PF).
The FIC, in a consultation feedback document, said it received comments from banks, financial services providers, industry associations, and consultants in response to draft PCC 118. These comments have been applied to the revised draft, PCC 118A, “where relevant”.
Responses to round-one feedback
The FIC provided high-level responses to the comments it received during the initial consultation phase. The feedback is organised into themes, reflecting the updates made to the draft based on stakeholder input.
Domestic MVTSPs include banks
The updated draft PCC 118A clarifies that banks are included as domestic MVTSPs. This inclusion aligns with Directive 9 of 2022 from the South African Reserve Bank (SARB), which regulates agents of MVTSPs and specifies registration methods with the SARB. PCC 118A provides interpretive guidance on MVTSPs, ensuring consistency with the SARB’s regulatory framework.
Inclusion of open- and closed-loop cards
An open-loop card is a payment card (for example, a prepaid or debit card) that is issued by a financial institution and linked to a widely accepted payment network, such as Visa or Mastercard. It can be used at any merchant or location that accepts cards from that network.
A closed-loop card is a payment card restricted to use within a specific ecosystem, such as a single retailer, chain, or service provider (for example, a gift card or a store-specific prepaid card). It is not linked to a universal payment network.
Commentators advocated for excluding closed-loop cards from the MVTSP category, citing their perceived low risk for ML/TF/PF.
The FIC disagrees, asserting that non-bank-issued closed-loop cards remain vulnerable to ML/TF/PF abuse, justifying their inclusion within the MVTSP scope.
Payment activities and payment system operators
Commentators indicated the preference for exclusion of payment system operators. The draft PCC 118A has been updated to provide guidance in this regard. Draft PCC 118A lists certain payment activities that are deemed activities of MVTSPs and is aligned to the draft consultation framework published for comment by the National Payment System Division.
Inclusion of cash aggregators and third-party payment providers
Third-party payment providers accept money or payment instructions from persons for the purpose of making payments on behalf of those persons to third parties to whom those payments are due. This business activities falls within the broad scope of MVTSPs. Similarly, services cash aggregator services fall within the broad scope of an MVTSP.
The FIC acknowledged the comments supporting the inclusion of these industries, confirming their status as MVTSPs in the updated draft.
Deadline to comment
Comments on draft PCC 118A must be submitted by the close of business on Friday, 25 April 2025. Commentators must use the online submission link only.
Any questions or requests relating to draft PCC 118A may be sent to consult@fic.gov.za
