Marketing of Agricultural Products Act: Milk Producers’ Organisation: Application for statutory levy on milk: Withdrawal

 Financial Intelligence Centre Act: Directive 9: Implementation of Travel Rule relating to crypto asset transfers.

Public Finance Management Act: Regulations: Accounting Standards: Comments invited.

National Payment System Act: Designation as clearing system participant: Payfast (Pty) Ltd.

National Payment System Act: Directive: Issuing of electronic funds transfer credit payment instructions of behalf of payer in national payment system.

Auditing Profession Act: Adoption of the International Auditing and Assurance Standards Board’s (IAASB) 2023-2024 Handbook of International Quality Management, Auditing, Review, other Assurance, and related services Pronouncements.

 National Council on Gender Based Violence and Femicide Act: Commencement on 15 November 2024

Economic Regulation of Transport Act:Proclamation by the President of the Republic of South Africa

• South Africa: 15 November deadline for submission of Trust Beneficial Owner Registers
• Construction mafia disrupts projects worth R63bn in five years Sarupen
• Experts urge tougher penalties
• Securing Data Privacy: Key highlights of Namibia’s Data Protection Bill, 2023
• Electricity law delay raises concerns
• Remodelled draft IRP to be unveiled next week for limited public consultation
• Jail time mooted for CEOs and municipal managers who commit environmental crimes
• Cape Town may pump as much sewage into the sea as it likes
• Major ‘instant EFT’ changes for South Africa
• Maile warns South Africans who register businesses on behalf of illegal foreigners
• The New Upstream Petroleum Resources Development Act from an Environmental Perspective
• Top court rules for Glencore in dispute with municipalities
• Treasury looks at regulations for the use of consultants

AGRICULTURE

 Marketing of Agricultural Products Act:

 MILK PRODUCERS’ ORGANISATION: APPLICATION FOR STATUTORY LEVY ON MILK: WITHDRAWAL

G 51542 RG 11763 GoN 5538

15 November 2024

1.     Milk Producers’ Organisation (MPO): They initially applied for the statutory levy and later withdrew the application.

2.     National Agricultural Marketing Council (NAMC): They are responsible for notifying the affected groups and managing the application process.

3.     Primary Milk Industry Stakeholders: This includes dairy farmers, milk processors, and other entities involved in the production and distribution of milk

Notification of Withdrawal:

The Milk Producers’ Organisation (MPO) had applied for a statutory levy on milk.

On November 8, 2024, the MPO decided to withdraw this application.

The MPO remains committed to engaging with stakeholders to address issues in the primary milk industry.

 DEPARTMENT OF AGRICULTURE, LAND REFORM AND RURAL DEVELOPMENT

 NO. R. 5538 15 November 2024

 NOTIFICATION OF THE WITHDRAWAL OF THE MILK PRODUCERS’ ORGANISATION

 APPLICATION FOR A STATUTORY LEVY ON MILK

On 25 October 2024, the National Agricultural Marketing Council (NAMC), established in terms of the Marketing of Agricultural Products Act (Act No. 47 of 1996, as amended), published a notice (No. R. 5470) in the Government Gazette notifying the directly affected groups in the primary milk industry about the application by the Milk Producers Organisation (MPO) for the establishment of a statutory levy on milk.

On 8 November 2024, following a meeting of MPO’s Board of Directors, the NAMC received a letter from the MPO Executive advising the NAMC to formally withdraw the statutory levy application. In the letter, the MPO indicated that they remain committed to engage with all relevant stakeholders to refine and strengthen their approach to matters impacting the primary milk industry.

It is hereby made known that the MPO withdraws its application for the establishment of a statutory measure related to levy on milk.

For enquiries, please contact Mr F Ferreira (MPO Chief Executive Officer), Tel: 012 843 5600 and/or Matsobane Mpyana (Senior Economist, NAMC) at e-mail: mmpyana@namc.co.za

Council Members: Mr. A. Petersen (Chairperson), Ms. T. Ntshangase (Deputy Chairperson), Prof. A. Jooste, Mr. S.J. Mhlaba, Ms. F. Mkile, Ms. N. Mokose, Ms. S. Naidoo, Mr. G. Schutte and Dr. S.T. Xaba.

 Marketing of Agricultural Products Act: Milk Producers’ Organisation: Application for statutory levy on milk: Withdrawal

G 51542 RG 11763 GoN 5538

15 November 2024

51542rg11763gon5538.pdf

Take note only

FINANCE

 Financial Intelligence Centre Act:

DIRECTIVE 9: IMPLEMENTATION OF TRAVEL RULE RELATING TO CRYPTO ASSET TRANSFERS

G 51556 GoN 5543

15 November 2024

The directive applies to accountable institutions listed in items 12 and 22 of Schedule 1 to the Financial Intelligence Centre Act (FIC Act). Specifically, these are institutions that act as:

1.     Ordering Crypto Asset Service Providers: Entities that initiate and transfer crypto assets upon request from the originator.

2.     Intermediary Crypto Asset Service Providers: Entities that receive and transmit crypto assets on behalf of other service providers without having a direct relationship with the originator or beneficiary.

3.     Recipient Crypto Asset Service Providers: Entities that receive crypto assets from ordering service providers and make them available to the beneficiary.

1.     Purpose: The directive aims to ensure that institutions involved in crypto asset transfers comply with the Financial Action Task Force (FATF) Recommendation 16, which relates to the “Travel Rule.”

2.     Definitions: It defines key terms such as:

Beneficiary: The receiver of a crypto asset.

Cross-border and domestic crypto asset transfers: Transfers involving service providers inside or outside South Africa.

Intermediary, ordering, and recipient crypto asset service         providers: Different roles in the transfer process.

Unhosted wallet: A crypto wallet where the user controls the private keys.

3.     Scope: Applies to accountable institutions listed in the Financial Intelligence Centre Act (FIC Act) that facilitate crypto asset transfers.

4.     Obligations:

Ordering Crypto Asset Service Providers: Must transmit detailed information about the originator and beneficiary of the transfer.

Intermediary Crypto Asset Service Providers: Must ensure all required information is transmitted and develop risk-based policies.

Recipient Crypto Asset Service Providers: Must verify beneficiary information and develop risk-based policies.

5.     Transmission and Security: Information must be transmitted securely and in a timely manner, with measures to protect its integrity and confidentiality.

6.     Unhosted Wallet Transfers: Providers must have policies for handling transfers involving unhosted wallets, especially in higher-risk scenarios.

7.     Effective Date and Compliance: The directive comes into effect on April 30, 2025. Non-compliance can result in administrative sanctions.

 DEPARTMENT OF FINANCE

 NO. 5543 15 November 2024

 DIRECTIVE 9

 concerning the implementation of the “Travel Rule” relating to crypto asset transfers in accordance with the Financial Action Task Force Recommendations

Directive No 9 of 2024

 1. PURPOSE

1.1 This Directive is issued by the Financial Intelligence Centre (Centre) in terms of section 43A(2) of the Financial Intelligence Centre Act, 2001 (Act 38 of 2001).

1.2 The purpose of this Directive is to ensure that accountable institutions that provide or engage in activities of crypto asset transfers, implement the requirements of Recommendation 16 of the Financial Action Task Force in the context of crypto asset transfers.

2. DEFINITIONS

2.1 In this Directive the “FIC Act” means the Financial Intelligence Centre Act, 2001 (Act 38 of 2001) and includes any regulation or Directive made under the Act, and, unless the context otherwise indicates, any word or expression in this Directive to which a meaning has been assigned in the Act has that meaning, and

2.1.1 ‘beneficiary’ means a person or entity that is identified by the originator as the receiver of a crypto asset associated with a transfer of crypto assets;

2.1.2 ‘cross-border crypto asset transfer’ means a transfer where either the ordering crypto asset service provider or the receiving crypto asset service provider is located outside the Republic of South Africa;

2.1.3 ‘domestic crypto asset transfer’ means a transfer where the ordering crypto asset service provider and receiving crypto asset service provider are both located in the Republic;

2.1.4 ‘intermediary crypto asset service provider’ means a crypto asset service provider that receives and transmits crypto assets on behalf of an ordering crypto asset service provider or beneficiary crypto asset service provider or another intermediary crypto asset service provider and where the intermediary crypto asset service provider does not have a business relationship with either the originator or beneficiary;

2.1.5 ‘ordering crypto asset service provider’ means a crypto asset service provider that initiates a transfer and transfers the associated crypto asset upon receiving the request for the transfer from or on behalf of the originator;

2.1.6 ‘originator’ means a person or entity that initiates an instruction to the ordering crypto asset service provider to execute the transfer of crypto assets;

2.1.7 ‘recipient crypto asset service provider’ means a crypto asset service provider that receives a crypto asset from an ordering crypto asset service provider, directly or through an intermediary crypto asset service provider, and makes the crypto asset associated with the transfer available to the beneficiary;

2.1.8 ‘unhosted wallet’ means a type of crypto wallet where the user has exclusive control of the private keys; and

2.1.9 ‘qualifying transfer’ means a transaction in a business relationship involving a crypto asset which is any value above zero.

3. SCOPE OF THIS DIRECTIVE

This Directive applies to accountable institutions listed in items 12 and 22 of Schedule 1 to the FIC Act that are ordering, intermediary or recipient crypto asset service providers, which facilitate or enable the origination or receipt of domestic and cross-border transfers of crypto assets or act as an intermediary in receiving or transmitting the crypto assets for or on behalf of a client.

4. OBLIGATIONS OF ORDERING CRYPTO ASSET SERVICE PROVIDERS

4.1 An accountable institution that is an ordering crypto asset service provider must comply with the provisions of paragraphs 4.2 to 4.9 below.

4.2 An ordering crypto asset service provider must transmit to the recipient crypto asset service provider the following information concerning the originator of a qualifying transfer:

4.2.1 if the originator is a natural person, the originator’s:

4.2.1.1 full name; and

4.2.1.2 identity number, if the originator is a South African citizen or resident; or

4.2.1.3 passport number or foreign national identity number, and date of birth, if the originator is not a South African citizen or resident; and

4.2.1.4 residential address, if such an address is readily available; or

4.2.1.5 country of birth, if the residential address is not readily available; or

4.2.2 if the originator is a legal person, the originator’s:

4.2.2.1 registered name;

4.2.2.2 registration number under which it is incorporated; and

4.2.2.3 registered address;

4.2.3 the originator’s distributed ledger address associated with the transfer, if the transfer is registered on a network using distributed ledger or similar technology, and

4.2.4 the originator’s crypto asset account number with the ordering crypto asset service provider, if such an account is used to process the transaction, or a unique transaction reference number, if such an account number is not available.

4.3 An originator of a crypto asset transfer is the client of the ordering crypto asset service provider, as contemplated in the FIC Act, for the purposes of the execution of the transfer. The information relating to the originator that is transmitted to the recipient crypto asset service provider in accordance with paragraph 4.2 above, must be subjected to customer due diligence in accordance with Part 1 of Chapter 3 of the FIC Act and the Risk Management and Compliance Programme that the ordering crypto asset service provider is required to develop, document, maintain and implement in accordance with section 42 of the FIC Act.

4.4 An ordering crypto asset service provider must transmit to the recipient crypto asset service provider the following information concerning the beneficiary:

4.4.1 the full name of the beneficiary;

4.4.2 the beneficiary’s distributed ledger address associated with the transfer, in cases, if the transfer is registered on a network using distributed ledger or similar technology, and

4.4.3 the beneficiary’s crypto asset account number with the recipient crypto asset service provider, if such an account is used to process the transaction and this information is readily available to the ordering crypto asset service provider.

4.5 In respect of a transfer that is a single transaction of less than R5 000, the ordering crypto asset service provider must transmit to the recipient crypto asset service provider the following information, at a minimum:

4.5.1 the full name of the originator referred to in paragraphs 4.2.1.1 or 4.2.2.1 above, as the case may be;

4.5.2 the originator’s distributed ledger address associated with the transfer, if the transfer is registered on a network using distributed ledger or similar technology; and

4.5.3 the originator’s crypto asset account number with the ordering crypto asset service provider, if such an account is used to process the transaction, or a unique transaction reference number, if such an account is not available;

4.5.4 the full name of the beneficiary;

4.5.5 the beneficiary’s distributed ledger address associated with the transfer, in cases, if the transfer is registered on a network using distributed ledger or similar technology, and

4.5.6 the beneficiary’s crypto asset account number with the recipient crypto asset service provider, if such an account is used to process the transaction and this information is readily available to the ordering crypto asset service provider.

4.6 An ordering crypto asset service provider need not verify the information referred to in paragraph 4.5 in respect of a transfer that is a single transaction valued at less than R5 000 for accuracy, unless there is a suspicion of money laundering or terrorist financing, in which case, the ordering crypto asset service provider must verify the information pertaining to the originator.

4.7 When an ordering crypto asset service provider will be transmitting the information referred to in paragraphs 4.2, 4.4 and 4.5 above to another crypto asset service provider, the ordering crypto asset service provider must, before it transfers the information in question-

4.7.1 identify the counterpart crypto asset service provider to which it will transmit the information in question;

4.7.2 conduct due diligence on that counterpart crypto asset service provider-

4.7.2.1 to determine whether the counterpart can reasonably be expected to protect the confidentiality of information transmitted to it; and

4.7.2.2 to avoid dealing with an illicit actor or an entity that is identified pursuant to a Resolution of the United Nations Security Council and that is announced in a notice referred to in section 26A (3) of the FIC Act, on the understanding that an ordering crypto asset service provider does not have to undertake the due diligence referred to in subparagraphs 4.7.2.1 and

4.7.2.2 above for each transfer of a crypto asset when dealing with a counterpart crypto asset service provider for which it has previously conducted this due diligence, on the understanding further that an ordering crypto asset service provider must conduct the due diligence referred to in subparagraphs 4.7.2.1 and

4.7.2.2 above whenever there is a suspicion of money laundering, terrorist financing or proliferation financing against the counterpart crypto asset service provider, and

4.7.3 update the due diligence referred to in subparagraph 4.7.2 above which it has previously conducted for a counterpart crypto asset service provider periodically or when it identifies that money laundering, terrorist financing or proliferation financing risk emerges from the relationship with a counterpart crypto asset service provider.

4.8 An ordering crypto asset service provider may not execute a crypto asset transfer if it cannot comply with the requirements referred to in paragraphs 4.1 to 4.7 above.

4.9 An ordering crypto asset service provider must provide for the manner in which and the processes by which it will implement measures to comply with the requirements of paragraphs 4.1 to 4.8 above, in the Risk Management and Compliance Programme that the ordering crypto asset service provider is required to develop, document, maintain and implement in accordance with section 42 of the FIC Act.

5. OBLIGATIONS OF INTERMEDIARY CRYPTO ASSET SERVICE PROVIDERS

5.1 An accountable institution that is an intermediary crypto asset service provider must comply with the provisions of paragraphs 5.2 to 5.5 below.

5.2 An intermediary crypto asset service provider must ensure that all originator and beneficiary information that pertains to a cross-border or domestic crypto asset transfer, is transmitted to the receiving crypto asset service provider, or another intermediary crypto asset service provider in a transaction chain, as the case may

5.3 An intermediary crypto asset service provider must take reasonable measures to identify cross-border crypto asset transfers that lack the required information referred to in paragraphs 4.2, 4.4 and 4.5 above.

5.4 An intermediary crypto asset service provider must develop, document, maintain and implement effective risk-based policies and procedures for determining:

5.4.1 when to execute, suspend execution, or return a cross-border crypto asset transfer that lack any of the required information referred to in paragraphs 4.2, 4.4 and 4.5 above; and

5.4.2 the appropriate follow-up action that the intermediary crypto asset service provider will take in each instance where it executes, suspends execution or returns a cross-border crypto asset transfer referred to in paragraph 5.4.1 above.

5.5 The measures referred to in paragraph 5.3 above and the policies and procedures referred to in paragraph 5.4 above, must be included in the Risk Management and Compliance Programme that the intermediary crypto asset service provider is required to develop, document, maintain and implement in accordance with section 42 of the FIC Act.

6. OBLIGATIONS OF RECIPIENT CRYPTO ASSET SERVICE PROVIDERS

6.1 An accountable institution that is a recipient crypto asset service provider must comply with the provisions of paragraphs 6.2 to 6.6 below.

6.2 A beneficiary of a crypto asset transfer is the client of the recipient crypto asset service provider, as contemplated in the FIC Act, for the purposes of the execution of the transfer. A recipient crypto asset service provider must, subject to paragraph  6.2, comply with the requirements relating to the verification of the beneficiary’s identity in terms of the FIC Act and the Risk Management and Compliance Programme that the recipient crypto asset service provider is required to develop, document, maintain and implement in accordance with section 42 of the Act.

6.3 In respect of an inward transfer that is a single transaction valued at less than R5 000 from an originator in a high-risk or other monitored jurisdiction, a recipient crypto asset service provider must verify the accuracy of the beneficiary information.

6.4 A recipient crypto asset service provider must take reasonable measures, which may include post-event monitoring or real-time monitoring where feasible, to identify cross-border crypto asset transfers that lack the required information referred to in paragraphs 4.2, 4.4 and 4.5 above.

6.5 A recipient crypto asset service provider must develop, document, maintain and implement effective risk-based policies and procedures for determining:

6.5.1 when to execute, suspend execution or return a cross-border crypto asset transfer that lacks any of the required information referred to in paragraphs 4.2, 4.4 and 4.5 above; and

6.5.2 the appropriate follow-up action that the recipient crypto asset service provider will take in each instance where it executes, suspends execution or returns a cross-border crypto asset transfer referred to in paragraph 6.5.1 above.

6.6 The measures referred to in paragraph 6.4 above and the policies and procedures referred to in paragraph 6.5 above, must be included in the Risk Management and Compliance Programme that the recipient crypto asset service provider is required to develop, document, maintain and implement in accordance with section 42 of the FIC Act.

7. IMMEDIATE AND SECURE TRANSMISSION OF ORIGINATOR AND BENEFICIARY INFORMATION

7.1 Accountable institutions that are ordering or intermediary crypto asset service providers must comply with the provisions of paragraphs 7.2 to 7.4 below.

7.2 Ordering and intermediary crypto asset service providers must transmit the required information referred to in paragraphs 4.2, 4.4 and 4.5 above prior to, or simultaneously with the transfer itself to the recipient crypto asset service provider or intermediary crypto asset service provider, as the case may be.

7.3 Ordering and intermediary crypto asset service providers may transmit the required information referred to in paragraphs 4.2, 4.4 and 4.5 above in batches, but must comply with paragraph 7.1 nonetheless. Post facto transmission of the required information is not permitted.

7.4 Ordering and intermediary crypto asset service providers must transmit and store the required information referred to in paragraphs 4.2, 4.4 and 4.5 above in a secure manner and protect the integrity and availability of the required information to facilitate record keeping and to protect it from unauthorised disclosure.

 8. UNHOSTED WALLET TRANSFERS

8.1 Accountable institutions that are ordering or recipient crypto asset service providers must comply with the provisions of paragraphs 8.2 to 8.4 below.

8.2 Ordering and recipient crypto asset service providers must develop, document, maintain and implement effective risk-based policies and procedures for the treatment of crypto asset transfers that involve unhosted wallets.

8.3 The policies and procedures referred to in paragraph 8.2 above must include the manner in which and the processes by which further information on the unhosted wallet is obtained in the case where the crypto asset service provider determines that there is a higher money laundering, terrorist financing or proliferation financing risk.

8.4 The policies and procedures referred to in paragraph 8.2 above, must be included in the Risk Management and Compliance Programme that the ordering and recipient crypto asset service providers are required to develop, document, maintain and implement in accordance with section 42 of the FIC Act.

9. EFFECTIVE DATE AND NON-COMPLIANCE

9.1 This Directive comes into operation on 30 April 2025.

9.2 A crypto asset service provider that fails to comply with a provision of this Directive is non-compliant and is subject to an administrative sanction in accordance with section 45C of the FIC Act.

MR P SMIT

ACTING DIRECTOR

FINANCIAL INTELLIGENCE CENTRE

 Financial Intelligence Centre Act: Directive 9: Implementation of Travel Rule relating to crypto asset transfers

G 51556 GoN 5543

15 November 2024 

51556gon5543.pdf

All person who are involved in the crypto supply chain must implement a robust RMCP and ensure the obligations in purple print above are performed and implemented in respect of each transaction.

Public Finance Management Act: Regulations:

Accounting Standards: Comments invited

G 51556 GeN 2832

– Comment by 13 Dec 2024

15 November 2024

1.     National and Provincial Departments: All government departments at the national and provincial levels.

2.     Public Entities: Entities listed in Schedules 2 and 3 of the PFMA, which include major public enterprises and other government agencies.

3.     Constitutional Institutions: Institutions established under the Constitution of South Africa.

4.     Municipalities and Municipal Entities: Although they are primarily governed by the Municipal Finance Management Act (MFMA), they may also be affected by certain GRAP standards.

1.     Proposed Regulations:

·       GRAP 1: Amendments to the Presentation of Financial Statements (Revised 2022).

·       GRAP 103: Heritage Assets (Revised 2022).

·       GRAP 105: Transfers of Functions Between Entities Under Common Control (Revised 2023).

·       GRAP 106: Transfers of Functions Between Entities Not Under Common Control (Revised 2023).

·       GRAP 107: Mergers (Revised 2023).

2.     Implementation Date: The proposed regulations are intended to be implemented from the financial year starting on April 1, 2026.

3.     Public Comments: The public is invited to submit comments on these proposed regulations within 30 days from the date of publication. Comments can be sent to the provided email addresses: CommentDraftLegislation@treasury.gov.za and oagqueries@treasury.gov.za.

DEPARTMENT OF FINANCE

NO. 2832 15 November 2024

NATIONAL TREASURY

 PUBLIC FINANCE MANAGEMENT ACT, 1999:

 INVITATION FOR PUBLIC COMMENTS ON PROPOSED REGULATIONS ON ACCOUNTING STANDARDS

1. The Minister of Finance, in terms of section 91(1) of the Public Finance Management Act, 1999 (Act No. 1 of 1999 – the Act), proposes to make the regulations set out in the Schedule and the proposed implementation date is from the financial year commencing on 1 April 2026:

(a) Amendments to GRAP 1 on Presentation of Financial Statements (Revised 2022);

(b) GRAP 103 on Heritage Assets (Revised 2022);

(c) GRAP 105 on Transfers of Functions Between Entities Under Common Control (Revised 2023);

(d) GRAP 106 on Transfers of Functions Between Entities Not Under Common Control (Revised 2023); and

(e) GRAP 107 on Mergers (Revised 2023).

2. Public comments on the proposed regulations are, in terms of section 91(4) of the Act, invited and comments may be submitted to CommentDraftLegislation@treasury.gov.za and oagqueries@treasury.gov.za within 30 days from the date of publication of this notice.

SCHEDULE

 Amendments to GRAP 1 on Presentation of Financial Statements

GRAP 103 on Heritage Assets

GRAP 105 on Transfer of Functions Between Entities Under Common Control

GRAP 106 on Transfer of Functions Between Entities Not Under Common Control

GRAP 107 on Mergers

 Public Finance Management Act: Regulations: Accounting Standards: Comments invited

G 51556 GeN 2832

– Comment by 13 Dec 2024

15 November 2024

 51556gen2832.pdf

Refer these standards to your financial department for analysis and comment.

 National Payment System Act:

Designation as clearing system participant: Payfast (Pty) Ltd

G 51556 GoN 5549

15 November 2024

Payfast (Pty) Ltd

1.     Designation of Payfast (Pty) Ltd:

·       Payfast has been designated as a clearing system participant under the National Payment System Act, 1998.

·       This designation aims to enhance the integrity, effectiveness, efficiency, and safety of the national payment system (NPS).

2.     Background:

·       Payfast, originally part of the DPO Group, was fully acquired by Network International PLC in 2021.

·       The consolidation of several entities under Network International led to the rebranding of Payfast (Pty) Ltd.

3.     Services Provided by Payfast:

·       Payfast offers payment solutions to micro, small, and medium enterprises (MSMEs).

·       It provides a streamlined entry point for merchants to integrate their e-commerce platforms.

·       Payfast plans to introduce a physical point-of-sale solution to bridge online and offline transactions.

4.     Conditions for Designation:

·       Payfast must adhere to several conditions, including membership in Visa and/or Mastercard, service agreements with relevant payment clearing house operators, and compliance with the Payment System Management Body (PSMB) criteria.

·       Payfast must enter into mentorship and sponsorship agreements with Absa Bank Limited, the SARB settlement system participant associated with Payfast.

·       Participation in various payment clearing houses (PCHs) as an acquirer and compliance with interchange rates set by the SARB.

5.     Regulatory Compliance:

·       Payfast must continue to be registered and provide services as a third-party payment provider (TPPP) in accordance with the Directive for Conduct within the National Payment System.

 SOUTH AFRICAN RESERVE BANK

NO. 5549 15 November 2024

 DESIGNATION NOTICE

Designation of Payfast (Pty) Ltd (registration number 1999/017441/07) as a clearing system participant by the Governor of the South African Reserve Bank in terms of section 6(3)(a) of the National Payment System Act, 1998 (Act No. 78 of 1998), as amended:

1. Introduction

1.1 The South African Reserve Bank (SARB) is empowered to designate a clearing system participant in terms of section 6(3)(a) of the National Payment System Act, 1998 (Act No. 78 of 1998) (NPS Act), as amended. Such designation may be made if the designation is in the interest of the integrity, effectiveness, efficiency or safety of the national payment system (NPS).

1.2 The objective of this Designation Notice is to designate Payfast (Pty) Ltd (Payfast) as a clearing system participant in the NPS. The designation will enable Payfast to clear in the manner contemplated in section 4(2)(d)(i) of the NPS Act.

2. Background of the designated clearing system participant

2.1 Paygate (Pty) Ltd (Paygate) was founded in 1999 and it was acquired by the Direct Pay Online (DPO) Group in 2016 through a private equity investment. Following this acquisition, a series of strategic acquisitions ensued, including Virtual Card Services, Paythru SA, Setcom (Pty) Ltd and, ultimately, Payfast in 2019. These acquisitions collectively formed the DPO Group, a diversified family of companies in the payment services sector. 2.2 In 2021, Network International PLC (Network International) completed a full acquisition of the DPO Group, including all its affiliated companies. Effective 1 April 2023, four South African legal entities previously owned by 3G Direct Pay South Africa (Pty) Ltd, namely Setcom (Pty) Ltd, Payfast, Payfast Holdings (Pty) Ltd and Paygate, were consolidated under the ownership of Network International. This unified entity was rebranded as Payfast (Pty) Ltd with registration number 1999/017441/07. This consolidation encompassed the amalgamation of all employees, banking facilities, merchants and intellectual property into this single entity.

2.3 Payfast provides services to micro, small and medium enterprise (MSME), merchants through a single, streamlined entry point. Merchants can easily integrate their e-commerce platforms through a direct Application Programming Interface connection or by using one of over 80 integrated shopping cart platforms. As a payment facilitator, Payfast offers a plug-andplay solution customised to the specific needs of MSME merchants. This unified approach simplifies the payment process and makes it easier for businesses of different sizes to access these services.

2.4 Payfast applied to become a designated clearing system participant to expand its current offering to merchants through acquiring payment instructions for card transactions. In acquiring payment instructions for card transactions, Payfast will introduce a physical point-of-sale solution that aligns with its vision to offer an all-encompassing payment ecosystem. Payfast aims to bridge the gap between online and offline transactions and enhance convenience for businesses and consumers.

2.5 Payfast is currently a third-party payment provider (TPPP) and a system operator registered with the Payments Association of South Africa.

3. Designation

3.1 The SARB considered the provisions of the NPS Act and has deemed it to be in the interest of the safety, efficiency, integrity and effectiveness of the NPS to designate Payfast as a clearing system participant.

3.2 Therefore, I, Mr E L Kganyago, the Governor of the SARB, with effect from the date of publication in the Government Gazette, hereby:

3.2.1 designate Payfast as a clearing system participant in terms of sections 6(3)(a) of the NPS Act, subject to the conditions listed in paragraph 4; and 3.2.2 confirm, in terms of section 6(3)(a)(ii) of the NPS Act, that the SARB settlement system participant associated with Payfast is Absa Bank Limited (Absa).

4. Conditions

4.1 The aforementioned designation is subject to Payfast adhering to the following conditions. Payfast must, within the time frames to be determined by the SARB:

4.1.1 be a member of Visa and/or Mastercard;

4.1.2 conclude service agreements with the relevant payment clearing house (PCH) system operators through which clearing will be effected;

4.1.3 comply with the entry and participation criteria to become a member of the Payment System Management Body (PSMB), as referred to in section 3 of the NPS Act, and the relevant structures of the PSMB as well as with any other criteria set by the PSMB for clearing system participants;

4.1.4 enter into a mentorship agreement with Absa and comply with any other requirements set by the PSMB and Absa for mentorship;

4.1.5 enter into a sponsorship agreement with Absa as the SARB settlement system participant associated with Payfast, in terms of which Absa willsettle payment obligations on behalf of Payfast, and comply with any other requirements set by the PSMB and/or Absa for sponsorship;

4.1.6 participate in the Debit Card, Credit Card, American Express Card, Diners Club Card and Fleet Card PCHs as an acquirer, subject to the relevant PCH agreements and clearing rules, and adhere to the interchange rates applicable to cards as determined by the SARB;

4.1.7 obtain written approval from Absa and the SARB, which shall not be unreasonably withheld, prior to participating in a PCH that is not set out in paragraph 4.1.6 above as an acquirer and follow the normal process for participation in a PCH, provided that written approval is granted;

4.1.8 not issue payment instruments, including the origination of credit card push instruction transactions, or sponsor or clear on behalf of any third parties in any PCH without the prior written approval of the SARB and Absa;

4.1.9 comply with applicable requirements as well as any other criteria agreed to between Payfast and Absa, and as specified in the mentorship and sponsorship agreements concluded between said parties;

4.1.10 terminate participation in a PCH subject to the process for termination determined by the PSMB and prior written notice given to Absa and the SARB, if and when applicable; and

4.1.11 continue to be registered and provide services as a TPPP in terms of the Directive for Conduct within the National Payment System in respect of Payments to Third Persons (Directive 1 of 2007) whilst designated as a clearing system participant.

4.2. The conditions listed above apply exclusively for the designation of Payfast as a clearing system participant. The conditions may be varied or revoked and new conditions may be imposed by the SARB by way of a notice in the Government Gazette.

Signed at Pretoria on this ……………… day of October 2024.

…………………………………………………………………………..

Mr E L Kganyago

Governor

South African Reserve Bank

 National Payment System Act: Designation as clearing system participant: Payfast (Pty) Ltd

G 51556 GoN 5549

15 November 2024

51556gon5549.pdf

Take note and if Payfast – ensure NPSA followed as applicable.

 National Payment System Act: Directive:

ISSUING OF ELECTRONIC FUNDS TRANSFER CREDIT PAYMENT INSTRUCTIONS OF BEHALF OF PAYER IN NATIONAL PAYMENT SYSTEM

G 51556 GoN 5550

15 November 2024

1.     Fintech Companies: Especially those leveraging technology to offer innovative payment solutions, such as screen scraping, to facilitate EFT credit payments.

2.     Payment Service Providers: Entities that handle the processing of EFT credit payments on behalf of payers.

3.     Businesses Using Screen Scraping: Any business that uses screen scraping to issue EFT credit payment instructions must comply with the directive.

4.     Clearing System Participants: Entities defined under the National Payment System Act that participate in the clearing and settlement of payments.

1.     Definitions:

·       Provides detailed definitions of terms such as beneficiary, clearing system participant, cyberattack, data breach, electronic funds transfer credit, and screen scraping.

Screen scraping in payments means the use of computer techniques to solicit the payer’s online banking login credentials to access the clearing system participant’s online banking website to issue an electronic funds transfer credit payment instruction on behalf of the payer.

2.     Background:

·       Explains the role of the SARB in regulating and supervising payment systems.

·       Discusses the emergence of fintech companies using screen scraping for EFT credit payments and the associated risks.

3.     Purpose:

·       The directive aims to mitigate risks associated with issuing EFT credit payment instructions using screen scraping.

4.     Scope:

·       Applies to any person issuing payment instructions on behalf of a payer using screen scraping or similar tools.

5.     Directive:

·       Registration Requirements: Entities must register with the SARB and obtain informed consent from payers.

·       Conditions for Registration: Includes employing qualified personnel, ensuring data security, and performing due diligence on beneficiaries.

·       Ongoing Obligations: Covers responsible marketing, consumer awareness, informed consent, operational risk management, data protection, dispute resolution, and record-keeping.

6.     Supervision and Compliance Monitoring:

·       Details the SARB’s authority to conduct inspections and the procedures for such inspections.

7.     Effective Date and Non-Compliance:

·       The directive becomes effective 90 days after publication. Non-compliance can result in termination of registration and other penalties.

8.     Conclusion:

·       Encourages entities to seek clarification from the SARB if they are uncertain about compliance with the directive.

 SOUTH AFRICAN RESERVE BANK

NO. 5550 15 November 2024

 Directive in respect of issuing of electronic funds transfer credit payment instructions on behalf of the payer in the national payment system

 Directive No. 2 of 2024

 Contents

1. Definitions

2. Background

3. Purpose

4. Scope of this directive

5. Directive

6. Supervision and compliance monitoring

7. Effective date and non-compliance

8. Conclusion

 1. Definitions

1.1 Unless the context indicates otherwise where the interpretation should further be in the context of this directive, any word or expression used in this directive to which a meaning has been assigned in the National Payment System Act 78 of 1998, as amended (NPS Act), has that meaning.

1.2 Beneficiary refers to a person that is identified by the payer as the receiver of the funds associated with the electronic funds transfer credit.

1.3 Clearing system participant is a person defined as such in section 1 of the NPS Act.

1.4 Critical staff means a natural person that performs functions that are essential to the operations of a person issuing electronic funds transfer credit payment instructions on behalf of the payer, using screen scraping, including a person who has access to information technology (IT) systems.

1.5 Cyberattack means malicious attempt(s) to exploit vulnerabilities through the cyber medium to damage, disrupt or gain unauthorised access to IT systems.

1.6 Cyber-event means any observable occurrence in an information system. Cyber-events sometimes provide an indication that a cyber-incident is actually occurring.

1.7 Cyber-incident means a cyber-event that adversely affects the cybersecurity of an information system and/or the information that the system processes, stores or transmits, or which violates the security policies, security procedures and/or acceptable use policies, whether resulting from malicious activity or not.

1.8 Data breach means a compromise of security that leads to the accidental or unlawful destruction, loss, alteration, unauthorised disclosure of or access to data transmitted, stored or otherwise processed.

1.9 Due diligence means the identification, understanding and obtaining of information about the business relationship of a beneficiary of the payment.

1.10 Electronic funds transfer credit means a payment instruction carried out by electronic means on behalf of a payer, with a view to making an amount of funds available to a beneficiary, irrespective of whether the payer and the beneficiary are the same person.

1.11 Electronic wallet is a digital representation of value that is stored electronically on an electronic device.

1.12 FIC Act means the Financial Intelligence Centre Act 38 of 2001, as amended.

1.13 Faster payments refer to a low-value, credit-push payment service in which both the transmission of the payment message and the availability of funds to the beneficiary occur in real time or near-real time, on a basis that the service is available 24 hours a day, 7 days a week (24/7).

1.14 Fraud refers to the issuing of a payment instruction with the intention to defraud a person.

1.15 Front-end interface is the point at which a payer interacts with a website or application.

1.16 Governing body refers to a person or body of persons, whether elected or not, that manages, controls and formulates the policy and strategy of the person issuing electronic funds transfer credit payment instructions on behalf of the payer, using screen scraping; directs its affairs; or has the authority to exercise the powers and perform the functions of the person issuing electronic funds transfer credit payment instructions on behalf of the payer, using screen scraping.

1.17 Informed consent means any voluntary, specific and informed expression of will in terms of which permission is given by the payer for the processing of the payer’s online banking credentials.

1.18 Payer is a person that holds a payment account and allows a payment instruction to be issued from that payment account.

1.19 Payment instruction is an instruction to transfer funds or make a payment, as defined in section 1 of the NPS Act.

1.20 Person refers to a natural or juristic person and includes a trust.

1.21 POPI Act means the Protection of Personal Information Act 4 of 2013.

1.22 Scheduled payment transaction is a payment that is scheduled by the payer for a specific date as agreed between the payer and the beneficiary.

1.23 Screen scraping in payments means the use of computer techniques to solicit the payer’s online banking login credentials to access the clearing system participant’s online banking website to issue an electronic funds transfer credit payment instruction on behalf of the payer.

1.24 Sort-at-source means the practice of sorting payment instructions based on multiple holders of destination accounts and submitting such payment instructions directly to the holders of the destination accounts or requesting clients to pay directly into specific accounts (e.g. third-party payment providers’ or beneficiaries’ accounts), resulting in the bypassing of the clearing system, which is undertaken through regulated acquiring or sponsoring relationships.

 2. Background

 2.1 In terms of section 10(1)(c) of the South African Reserve Bank Act 90 of 1989, as amended (SARB Act), the South African Reserve Bank (SARB) is required to perform such functions, implement such rules and procedures and, in general, take such steps as may be necessary to establish, conduct, monitor, regulate and supervise payment, clearing or settlement systems. Furthermore, the NPS Act provides for the management, administration, operation, regulation and supervision of payment, clearing and settlement systems in the Republic of South Africa and for connected matters.

2.2 The national payment system (NPS) encompasses the entire payment process, from payer to beneficiary, and includes settlement between banks. The process includes all the tools, systems, instruments, mechanisms, institutions, agreements, procedures, rules or laws applied or utilised to effect payment. The NPS is a primary component of the country’s monetary and financial system as it enables the circulation of money, assisting transacting parties to make payments and exchange value.

2.3 The SARB is empowered in terms of section 12 of the NPS Act to issue directives, after consultation with the payment system management body, to any person regarding a payment system or the application of the provisions of the NPS Act. Currently, the Payments Association of South Africa is recognised by the SARB in section 3 of the NPS Act as a payment system management body to organise, regulate and manage the participation of its members in the payment system.

2.4 In recent years, the payment industry has witnessed the emergence of financial technology (fintech) companies that leverage technology to offer innovative tools, products and services. These tools, products and services are offered particularly in the e-commerce environment with minimal regulatory oversight. One such tool is screen scraping, which is used by a person, usually a fintech company, in partnership with beneficiaries, to conduct screen scraping to issue electronic funds transfer credit payment instructions. Although screen scraping is popular in e-commerce payment transactions, it is now growing in usage in other payment activities such as bill payments and the funding of electronic wallets, which are facilitated by a person that issues electronic funds transfer credit payment instructions on behalf of payers.

2.5 Screen scraping is largely conducted without the informed consent of the payer, the understanding of the implications of sharing the credentials as well as using the branding of clearing system participants without approval. This practice exposes the NPS, including the participants and payers to risks such as those stipulated in paragraphs 2.5.1 to 2.5.6. These risks have a negative impact on the integrity, efficiency, security and confidence in the NPS. These risks include but are not limited to:

2.5.1 Lack of informed consent and understanding of the implications of sharing the credentials: Many payers that use the front-end interface of a person issuing electronic funds transfer credit payment instructions on behalf of the payer, using screen scraping, are not informed that by entering their online banking credentials, they are not logging on to their actual clearing system participant’s proprietary online banking platform and do not understand the implications of sharing their credentials. Instead, they are sharing their online banking credentials with a person to issue electronic funds transfer credit payment instructions on their behalf. The use of payers’ online banking credentials without their informed consent and understanding of the implications in so doing has a negative impact on the integrity of payments and security of the NPS.

2.5.2 Misleading perception that the payment is instant: A person issuing electronic funds transfer credit payment instructions on behalf of the payer, using screen scraping, usually markets its service as providing an ‘instant or fast payment’ to the beneficiary’s account. This is misleading as a normal electronic funds transfer credit payment instruction does not necessarily result in the funds being credited into the beneficiary’s account instantly unless the payer chooses the faster payments option to process the payment into the beneficiary’s transactional account, or a transaction is an intrabank (on-us) transaction processed directly into the beneficiary’s transactional account. Misleading payers and beneficiaries that the payment is instant undermines the integrity of payments and confidence in the NPS.

2.5.3 Conducting sort-at-source: A person may use screen scraping to perpetuate the sort-at-source practice by using bank accounts from multiple banks to ensure that payments are on-us transactions, resulting in an ‘instant’ payment. Conducting sort-at-source negatively impacts the NPS as it goes against the SARB’s objectives of promoting efficiency, safety, interoperability, transparency, modernisation and optimisation of interchange fees.

2.5.4 Lack of data privacy: Screen scraping puts payers’ online banking credentials at risk of being compromised. Payers have no control over how their credentials and any other data or personal information are accessed, processed, used and stored by the person issuing an electronic funds transfer credit payment instruction on their behalf (e.g. account numbers and account statements may be stored and utilised without the payer’s informed consent). This undermines the public’s trust and confidence and security of the NPS.

2.5.5 Exposure to fraud: Rogue entities may pose as persons issuing electronic funds transfer credit payment instructions on behalf of payers, using screen scraping, on fraudulent e-commerce sites to capture payers’ online banking access credentials. Such entities may impersonate the payer and conduct any activity that the payer would have access to on their online banking platform (e.g. making real-time payments to themselves, applying for a personal loan, increasing transaction limits and ultimately initiating payments to mule transactional accounts). Similar to a lack of data privacy, fraud weakens the public’s trust, and confidence in and integrity and security of the NPS.

2.5.6 Risk of financial loss or non-delivery of the goods/services purchased: electronic funds transfer credit payments are final and irrevocable in nature and payers may face challenges when lodging disputes to reverse a transaction in the event of the beneficiary not honouring the agreement (e.g. not delivering the goods or delivering incorrect or counterfeit goods). Payers might also be held liable for the interest payable on such amounts when payment was made from the credit card account or overdraft facilities of the payer. This would significantly and negatively impact the efficiency, integrity and security of the NPS.

3. Purpose

3.1 The purpose of this directive is to impose requirements on persons issuing electronic funds transfer credit payment instructions on behalf of the payer, using screen scraping, or any other tool in the NPS to mitigate the risks identified in paragraph 2.5.

4. Scope of this directive

4.1 This directive applies to any person issuing payment instructions on behalf of a payer, using screen scraping, or a similar tool in the NPS.

5. Directive

5.1 Registration requirements

5.1.1 No person may issue electronic funds transfer credit payment instructions on behalf of a payer in the NPS unless that person: a. is registered with the SARB in the manner and form prescribed by the SARB; and

b. has obtained informed consent of the payer prior to issuing such a payment instruction or initiating such a payment; or

c. has been exempted from registration by the SARB.

5.1.2 A juristic person must apply for registration with the SARB to issue payment instructions or initiate payment on behalf of a payer.

5.1.3 The application to register with the SARB must be addressed to the Head of the National Payment System Department at npsdirectives@resbank.co.za.

5.1.4 The application for registration must be accompanied by the following information and supporting documents:

a. proof of business registration and/or founding documents of a juristic or legal person, issued by the applicable competent South African authorities;

b. proof of physical address of the place of business in South Africa;

c. disclosure of ownership, including the names and certified copies of the identity documents of the shareholders, trustees and ultimate beneficial owners;

d. organisational structure;

e. the types and sources of funding, including the capital contribution for the establishment and operation of the business. In the case of a loan, the funding details of the name of the lender and their domicile must also be provided;

f. a reasonably measurable forecast budget calculation for the next three financial years which demonstrates that the applicant is able to employ appropriate systems, resources and procedures to operate in a sound manner; and

g. a description of the applicant’s governance arrangements and internal control mechanisms relating to, inter alia, IT systems, data security, administrative, risk management and accounting procedures, which demonstrates that these governance arrangements, control mechanisms and procedures are appropriate, sound and adequate.

5.2 Conditions for registration

 5.2.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. employ or appoint a qualified person(s) with relevant experience responsible to ensure compliance with the relevant legislation, rules, regulatory frameworks and agreements;

b. employ or appoint a qualified person(s) with relevant experience responsible for risk management, including but not limited to fraud risk, operational risk and IT risk, and compliance function;

c. be satisfied that the key person(s) is honest and has integrity;

d. furnish the SARB with the curriculum vitae and copies of supporting documents, including but not limited to the identity document, proof of physical address and certificates of qualifications of a key person(s) upon their appointment;

e. demonstrate to the SARB, subject to the approval of the SARB, the manner in which informed consent will be requested from payers;

f. where it is not acting as a beneficiary, have clear and transparent policies and procedures approved by its governing body for on-boarding beneficiaries;

g. have terms and conditions approved by its governing body for the use of its service by payers and beneficiaries. The terms and conditions must be lawful, objective, non-discriminatory and proportionate;

h. ensure that contractual agreements with beneficiaries and the terms and conditions for payers clearly state that a party responsible for a fraudulent or unauthorised or incorrectly issued electronic funds transfer credit payment instruction must bear the risk;

i. demonstrate to the SARB that it has the necessary processes and systems in place to secure the payer’s data and online banking credentials to mitigate risks of fraud and cyberattacks;

j. not enter into contractual arrangements with beneficiaries that conduct illegal business; and

k. where is not acting as a beneficiary, perform due diligence on beneficiaries prior to entering into contractual arrangements and on an ongoing basis;

l. due diligence must include at least the following:

i. verification of the true identity of the beneficiary;

ii. establishment of whether the beneficiary’s business is legal and/or registered with the relevant authorities;

iii. understanding the business activity of a beneficiary;

iv. regular monitoring of a beneficiary’s transactions for any irregularities; and

v. keeping information obtained for the purpose of establishing and verifying the identities of beneficiaries in line with section 5.3.7.1.

5.2.2 The SARB reserves the right to decline an application for registration if the requirements in this directive are not met. Where an application is declined, the SARB shall disclose reasons for declining the application to the applicant.

5.3 Ongoing obligations

5.3.1 Marketing

5.3.1.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. apply responsible marketing practices on its product or service to payers in a manner that is not fraudulent or likely to create a misleading or false statement; and

b. refrain from using any clearing system participant’s branding on its front-end interface or when marketing its services unless it is authorised in writing by the said clearing system participant.

5.3.2 Consumer awareness

5.3.2.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. where it has contracted with a clearing system participant to issue electronic funds transfer credit payment instruction on behalf of the payer, inform its payers and beneficiaries explicitly and clearly of such a contract;

b. publicly disclose, in simple language, terms and conditions for using its product or service, procedures for handling payer complaints, privacy policy and other terms and conditions; and

c. refrain from misleading payers that transactions are compliant with standards that are not applicable to electronic funds transfer credit payments.

5.3.3 Informed consumer consent

5.3.3.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must obtain and receive informed consent prior to using the payer’s online banking credentials to access the transactional accounts of the payer to issue an electronic funds transfer credit payment instruction on behalf of the payer.

5.3.3.2 The request for informed consent by the person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. be simple and clear to the payer;

b. state that the payer’s login credentials will be processed and safeguarded in accordance with applicable information and data privacy legislation;

c. state that electronic funds transfer credit payments are final and irrevocable and that the payer cannot reverse a transaction;

d. state that by entering their login credentials, the payer is sharing the credentials with that person and is not logging on to their online banking website or application;

e. state how the payer’s credentials will be safeguarded and protected while in transit and when issuing an electronic funds transfer credit payment instruction; and

f. state that the payer is authorising that person to use their online banking credentials to issue the electronic funds transfer credit payment instruction on their behalf and that such details shall be used only for that purpose.

5.3.3.3 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must request and receive the payer’s informed consent to share their login credentials for each electronic funds transfer credit payment instruction, including scheduled payment transactions.

5.3.4 Operational risk

5.3.4.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. have sound and effective policies, systems and procedures to mitigate operational risks, including the risks it directly bears from or poses to beneficiaries, its customers, clearing system participants facilitating or enabling electronic funds transfers and/or any other relevant entities;

b. have mechanisms to promptly respond to, resolve and remedy any data breaches, transmission errors, unauthorised access and fraud;

c. have a comprehensive cyber-incident management plan approved by the IT function and its governance structures;

d. the cyber-incident management plan must include promptly informing payers when their online banking credential have been compromised; and

e. carry out regular and comprehensive security risk assessments of its critical staff, IT systems and business process environment to identify, assess and mitigate inherent risk exposures.

5.3.5 Payer data protection

5.3.5.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. comply with all requirements, where applicable, as provided for in the personal data and information protection laws, including but not limited to the POPI Act;

b. issue an electronic funds transfer credit payment instruction on behalf of the payer after the payer has provided informed consent and not modify any information on the payment instruction unless the payer has provided informed consent;

c. encrypt the payer’s online banking credentials at the time when the payer enters the credentials on its front-end interface platform;

d. use the recognised and most robust industry encryption standards to secure the payer’s credentials in transit;

e. use and regularly update anti-virus software to protect its system from malware and data security breaches;

f. not store payers’ online banking credentials and other sensitive payer payment data within its database or systems;

g. only use the online banking credentials for issuing an electronic funds transfer credit payment instruction on behalf of the payer and safely destroy the payer’s online banking credentials immediately after

executing a payment; and

h. have adequate information and data security infrastructure and systems

to prevent, detect and resolve any possible unauthorised access to the

online banking of the payer and/or data breach.

5.3.6 Dispute resolution mechanism

5.3.6.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. have a fair and formal dispute resolution mechanism that provides beneficiaries, clearing system participants and payers with practical means to lodge and resolve disputes relating to the issuing of electronic funds transfer credit payment instructions on behalf of the payer, including but not limited to instances of fraud, failure by beneficiaries to honour purchase orders, unpaid orders or failed payments after the beneficiary has already delivered the goods/services and possible data breaches;

b. ensure that its dispute resolution mechanism, including the complaints handling facility is clearly and easily accessible to payers and beneficiaries through all applicable communication channels such as a phoneline, email, mobile devices and a website;

c. ensure that the dispute resolution mechanism does not contravene the settlement provisions as stipulated in section 5 of the NPS Act; and

d. appoint an officer(s) responsible for the regulatory and payer complaints handling functions who shall promptly respond to all complaints raised and resolve the matter within a reasonable timeline.

5.3.7 Traceability, audit and record keeping

5.3.7.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. have systems that ensure that each transaction is traceable, from authorisation using the payer’s online banking credentials until the beneficiary is notified of the payment;

b. have a robust internal and external audit function that will undertake an assessment of the effectiveness of that person’s risk-management and control processes;

c. be able to demonstrate, when requested by the SARB, that it applies robust data security standards, including its data encryption;

d. keep the information obtained during its on-boarding process pertaining to a beneficiary or prospective beneficiary throughout its business relationship and for at least five years from the date on which the business relationship is terminated;

e. keep a record of every transaction, including the payer’s informed consent, whether the transaction is a once-off transaction or repeated transaction for at least five years from the date on which that transaction is concluded. A transaction record must at a minimum include the amount involved, the date on which the transaction was concluded, the parties to the transaction and the nature of the transaction; and

f. report suspicious and unusual transactions to the Financial Intelligence Centre as per section 29 of the FIC Act.

5.3.8 Liability risk management

5.3.8.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. have an insurance or guarantee mechanism against possible losses for payers and beneficiaries resulting from fraud and refunds;

b. not mislead payers or beneficiaries in believing that the issued electronic funds transfer credit payment instruction will be credited instantly to the beneficiary’s account unless the real-time payment option is used to process the payment directly into the beneficiary’s transactional account or a transaction is an intrabank transaction processed directly into the beneficiary’s transactional account;

c. have an effective mechanism to detect and identify incidents of fraudulent or unauthorised or incorrectly issued electronic funds transfer credit payment instructions and conduct reviews of audit trails to identify the source of the incident to determine the party liable for losses;

d. prove that, where a payer denies having authorised a payment instruction, the informed consent or authorisation was obtained from the payer, with the accurate payment amount and accurate beneficiary name and transactional account number and that the payment was not affected by technical deficiencies within its systems; and

e. pay a refund where it bears the liability or responsibility for fraudulent, unauthorised or incorrectly facilitated transactions to the payer within a reasonable time through the original method of payment, unless specifically agreed by the payer to have the credit processed through an alternate mode.

5.3.9 Attestation of compliance

5.3.9.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must have an audit function or appoint a qualified internal auditor to attest to the declaration of compliance with this directive in the manner and form prescribed by the SARB.

5.3.9.2 The attestation of compliance referred to in paragraph 5.3.9.1 must be submitted to the SARB by 31 March and 30 September each year using the following email address: npsdirectives@resbank.co.za.

5.3.10 Reporting requirements

5.3.10.1 A person issuing electronic funds transfer credit payment instructions on behalf of the payer must:

a. submit to the SARB its monthly data on volumes and values of transactions processed on or before the 15th of every month, using the email address in paragraph 5.3.9.2; and

b. report data security incidents (data breach, cyberattack, fraud and other related types of incidents) to the SARB immediately after being made aware of such incident and provide an analysis of the root cause and preventive measures undertaken to prevent recurrence, using the email address in paragraph 5.3.9.2.

5.3.10.2 The information provided in terms of paragraph 5.3.10.1 will be processed in accordance with section 33 of the SARB Act and section 10 of the NPS Act.

6. Supervision and compliance monitoring

6.1 A representative of the SARB may conduct a supervisory on-site or off-site inspection on the person issuing electronic funds transfer credit payment instructions on behalf of the payer, to promote compliance with this directive.

6.2 Subject to paragraphs 6.5.3 and 6.5.4, the SARB must provide prior written notification to the person whose business premises will be inspected.

6.3 The supervisory on-site inspection notification will specify:

6.3.1 date(s) of the intended supervisory on-site inspection;

6.3.2 names of the SARB representatives;

6.3.3 period under review; and

6.3.4 any other information/documentation required for inspection purposes.

6.4 Each SARB representative must produce a letter of authority and an identity document upon entry at the premises of a person issuing electronic funds transfer credit payment instructions on behalf of the payer, which officials must view for verification purposes and are prohibited to produce copies thereof.

6.5 The SARB representatives may enter any premises: 

6.5.1 without prior consent in the case of business premises operated by a person issuing electronic funds transfer credit payment instructions on behalf of the payer; or

6.5.2 with prior consent:

6.5.2.1 in the case of a private residence, where the business of the person issuing electronic funds transfer credit payment instructions on behalf of the payer is reasonably believed to be conducted at the private residence; or

6.5.2.2 in the case of persons not registered to issue electronic funds transfer credit payment instructions on behalf of the payer after informing that person that:

a. granting consent will enable the SARB representative to enter the premises and for the SARB to subsequently search the premises; and

b. he or she is under no obligation to admit the SARB representative in the absence of a warrant; or

6.5.3 without prior consent and without prior notice to any person issuing electronic funds transfer credit payment instructions on behalf of the payer if the entry is authorised by a warrant in terms of paragraph 6.16; or

6.5.4 with the prior authority of a senior staff member of the SARB, if the senior staff member on reasonable grounds believes that:

6.5.4.1 a warrant will be issued if applied for, in terms of paragraph 6.16;

6.5.4.2 the delay in obtaining the warrant is likely to defeat the purpose for which entry of the premises is sought; and

6.5.4.3 it is necessary to enter the premises to conduct the inspection and search the premises.

6.6 While on the premises, the SARB representatives, for the purpose of conducting the inspection, have the right of access to any part of the premises and to any document or item on the premises, and may do any of the following:

6.6.1 open or cause to be opened any strongroom, safe, cabinet or other container in which the SARB representatives reasonably suspect there is a document or item that may be relevant to the inspection;

6.6.2 examine, make extracts from and copy any document on the premises;

6.6.3 question any person on the premises to find out information relevant to the inspection;

6.6.4 require a person on the premises to produce to the SARB representatives any document or item that is relevant to the investigation and is in the possession or under the control of the person;

6.6.5 require a person on the premises to operate any computer or similar system or available through the premises to:

6.6.5.1 search any information in or available through that system; and

6.6.5.2 produce a record of that information in any format that the SARB representatives reasonably require;

6.6.6 if it is not practicable or appropriate to make a requirement in terms of subparagraph 6.6.5, operate any computer or similar system on or available through the premises for a purpose set out in that subparagraph; and

6.6.7 take possession of, and take from the premises, a document or item that may afford evidence of a contravention of this directive or may be relevant to the inspection.

6.7 The SARB representatives must give the person apparently in charge of the premises a written and signed receipt for the copies of documents or items taken as mentioned in paragraph 6.6.

6.8 Subject to paragraph 6.9, the SARB representative must ensure that any document or item taken by the SARB representative as mentioned in paragraph 6.6 is returned to the person when:

6.8.1 retention of the document or item is no longer necessary to achieve the object of the inspection; or

6.8.2 all proceedings arising out the inspection have been finally disposed of.

6.9 A document or item need not be returned to the person who produced it if:

6.9.1 the document or item has been handed over to a designated authority; or

6.9.2 it is not in the best interest of the public or any member or members of the public for the documents or items to be returned.

6.10 A person from whose premises a document or item was taken as mentioned in paragraph 6.6, or its authorised representative, may, during normal office hours and under the supervision of a representative of the SARB, examine, copy and make extracts from the document or item.

6.11 A person who is questioned, or required to produce a document or information during a supervisory on-site inspection contemplated, may object to answering the question or to producing the document or the information on the grounds that the answer, the contents of the document or the information may tend to incriminate the person.

6.12 On such an objection, the SARB representative conducting the supervisory on-site inspection may require the question to be answered or the document or information to be produced, in which case the person must answer the question or produce the document.

6.13 An incriminating answer given, and an incriminating document or information produced, as required in terms of paragraph 6.12, is not admissible in evidence against the person in any criminal proceedings, except in criminal proceedings for perjury or in which that person is tried based on the false or misleading nature of the answer.

6.14 The SARB representative conducting a supervisory on-site inspection must inform the person of the right to object at the commencement of the supervisory on-site inspection.

6.15 A judge or magistrate who has jurisdiction may issue a warrant for the purposes of this paragraph on application by a representative of the SARB.

6.16 The judge or magistrate may issue a warrant in terms of this paragraph:

 6.16.1 on written application by the SARB setting out under oath or affirmation why it is necessary to enter and inspect the premises; and

6.16.2 if it appears to the magistrate or judge from the information under oath or affirmation that:

6.16.2.1 there are reasonable grounds for suspecting that a contravention of the directive has occurred, may be occurring or may be about to occur;

6.16.2.2 entry and inspection of the premises is likely to yield information pertaining to the contravention; and

6.16.2.3 entry and investigation of those premises is reasonably necessary for the purposes of the investigation.

6.17 A warrant issued in terms of this paragraph must be signed by the judge or magistrate issuing it.

6.18 SARB representatives that enter the premises under the authority of a warrant must:

6.18.1 if there is apparently no one in charge of the premises when the warrant is executed, fix a copy of the warrant on a prominent and accessible place on the premises; and

6.18.2 on reasonable demand by any person on the premises, produce the warrant or a copy of the warrant.

7. Effective date and non-compliance

7.1 The directive is effective 90 days after publication thereof. The SARB reserves the right to amend any requirements in this directive.

7.2 A person issuing an electronic funds transfer credit payment instruction on behalf of the payer must comply with the requirements or conditions as stipulated in this directive.

7.3 Contravention of this directive is an offence in terms of section 12(8) of the

NPS Act.

7.4 The SARB may terminate the registration of a person registered in terms of this directive where such person fails to comply with this directive, or if it is in the interest of the safety and efficiency of the NPS. Any person whose registration has been terminated shall immediately cease to issue electronic funds transfer credit payment instructions on behalf of any payer.

7.5 Prior to terminating a registration, the SARB shall issue a notice of its intention to terminate the registration and give that person reasonable time to remediate the deficiencies identified. The time provided to remediate the deficiencies shall be determined on a case-by-case basis.

8. Conclusion

8.1 If a person issuing an electronic funds transfer credit payment instruction on behalf of the payer is uncertain as to whether its current or future business practices are aligned with this directive, that person should initiate discussions with the SARB to clarify the matter.

8.2 Attestation of compliance as well as any enquiry or clarification concerning this directive should be sent to the following email address: npsdirectives@resbank.co.za.

National Payment System Act: Directive: Issuing of electronic funds transfer credit payment instructions of behalf of payer in national payment system

G 51556 GoN 5550

15 November 2024 

51556gon5550.pdf

If you use screen scraping – please implement these requirements within 90 days.

Auditing Profession Act:

Adoption of the International Auditing and Assurance Standards Board’s (IAASB) 2023-2024 Handbook of International Quality Management, Auditing, Review, other Assurance, and related services Pronouncements

G 51636BN 690

21 November 2024

 Registered Auditors 

 1.     Adoption of Standards:

·       The IRBA has adopted the 2023-2024 Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements.

·       This includes several volumes and a supplement, replacing the 2022 editions.

2.     Key Publications:

·       Volume 1: Handbook of International Quality Management, Auditing, Review, Other Assurance, and Related Services Pronouncements.

·       Volume 3: Same as above, but another volume.

·       Supplement: Additional pronouncements for the 2023-2024 edition.

3.     Not Adopted:

·       Volume 2: The ISA for LCE (International Standard on Auditing for Less Complex Entities) has not been adopted for use in South Africa.

4.     Ethics Standards:

·       References to the International Ethics Standards Board for Accountants (IESBA) Code of Ethics must be read alongside the IRBA Code of Professional Conduct, which includes additional requirements for South African auditors.

5.     Availability:

·       These publications are available on the IRBA website, and the IRBA Code and amendments can also be accessed there.

6.     Contact Information:

·       For further assistance, inquiries can be directed to standards@irba.co.za.

If you need more detailed information or have specific questions about the content, feel free to ask!

 Auditing Profession Act: Adoption of the International Auditing and Assurance Standards Board’s (IAASB) 2023-2024 Handbook of International Quality Management, Auditing, Review, other Assurance, and related services Pronouncements

G 51636BN 690

21 November 2024

51636bn690.pdf

All Auditors to take note and apply where applicable.

GENDER-BASED VIOLENCE AND FEMICIDE

 NATIONAL COUNCIL ON GENDER BASED VIOLENCE AND FEMICIDE ACT:

Commencement on 15 November 2024

G 51542 RG 11763 P 219

15 November 2024

1.     Government Bodies:

·       Various government departments such as the Department of Women, Youth and Persons with Disabilities, the Department of Justice and Constitutional Development, the Department of Social Development, the Department of Health, the Department of Co-operative Governance and Traditional Affairs, the South African Police Service, the Department of Basic Education, and the National Prosecuting Authority.

2.     Civil Society:

·       Non-governmental organizations, labor unions, and other institutions representing citizens’ interests in the field of gender-based violence and femicide.

3.     Private Sector:

·       Businesses and private sector entities that can contribute resources and support to the initiatives against gender-based violence and femicide.

4.     Relevant Stakeholders:

·       This includes all organs of state, civil society, the private sector, youth structures, faith-based organizations, traditional structures, the media, development agencies, academic institutions, and other stakeholders involved in implementing the national strategy on gender-based violence and femicide.

5.     The Council and Its Members:

·       The National Council on Gender-Based Violence and Femicide itself, including its Board members, Chief Executive Officer, and the Secretariat.

6.     Provincial and Local Structures:

·       Provincial and local gender-based violence and femicide structures that are coordinated and held accountable under the norms and standards prescribed by the Minister.

 The Act establishes the National Council on Gender-Based Violence and Femicide (NCGBVF) to provide strategic leadership and coordination in combating gender-based violence (GBV) and femicide in South Africa.

It aims to:

• Coordinate a multi-sectoral approach to address GBV and femicide.
• Uphold human dignity, equality, and security as per the Constitution.
• Affirm a national commitment to a society free from GBV and femicide.
• Establish reporting mechanisms for monitoring and evaluation.

 Structure and Functions

The Council

• Establishment: The NCGBVF is a statutory body acting through its Board.
• Objects: Coordinate efforts to prevent and eliminate GBV and femicide, set priorities, and facilitate information sharing.
• Functions: Develop action plans, coordinate education and training, establish partnerships, and advise the Minister on relevant matters.

The Board

• Composition: Up to 15 members, including representatives from civil society, government departments, and the Chief Executive Officer (CEO).
• Appointment: Members are appointed by the President and must undergo security screening.
• Responsibilities: Monitor the implementation of action plans, control the Council’s powers, and ensure transparency and integrity in meetings.

Chief Executive Officer

• Appointment: Appointed by the Board for a five-year term, renewable once.
• Functions: Manage the Council’s operations, implement strategies, oversee financial management, and report to the Board.

Financial Management

• Funding: The Council’s funds come from parliamentary appropriations, donations, and other sources.
• Management: The CEO is responsible for maintaining financial records, preparing budgets, and ensuring compliance with the Public Finance Management Act.

Committees

• Establishment: The Board can establish committees to assist in its functions, including an Executive Management Committee, Human Resource and Reimbursement Committee, and Audit and Risk Committee.
• Functions: Committees perform delegated duties and report back to the Board.

Regulations and Reporting

• Regulations: The Minister can make regulations based on the Council’s recommendations.
• Reporting: The Council must submit annual reports to the Minister, who will table them in Parliament.

Provincial and Local Structures

• Coordination: The Minister, in consultation with the Board, will prescribe norms and standards for provincial and local GBV and femicide structures.

DETAILS

LINK TO FULL NOTICE  

National Council on Gender Based Violence and Femicide Act: Commencement on 15 November 2024

G 51542 RG 11763 P 219

15 November 2024

51542rg11783proc219.pdf

Take note of the creation of a National Council for GBV and F.

STANDARDS

Standards Act: Standards matters:  Various

 Standards Act: Standards matters: Comments invited

G 51556 GeN 2835

– Comment by 27 Dec 2024

15 November 2024

51556gen2835.pdf

Standards Act: Standards matters: Comments invited

G 51556GeN 2834

– Comment by 27 Dec 2024

15 November 2024

51556gen2834.pdf

Standards Act: Standards matters

G 51556 GeN 2836

15 November 2024

51556gen2836.pdf

TRANSPORTATION

LAW AND TYPE OF NOTICE

ECONOMIC REGULATION OF TRANSPORT ACT:

Proclamation by the President of the Republic of South Africa [English/ isiZulu]

G 51623 P 224

19 November 2024

 1.     Regulated Entities: These include any market, entity, or facility in the transport sector that was subject to economic regulation by the Minister immediately before the effective date of the Act. This can encompass entities involved in shipping and ports, aviation, rail, and road transport and infrastructure.

2.     Transport Infrastructure Owners: Entities that own infrastructure such as railways, ports, and airports must comply with regulations regarding access agreements, access fees, and the determination of access costs.

3.     Service Providers: Companies providing transport services, including passenger and freight services by road, rail, air, and sea, must adhere to price controls, service standards, and other regulatory requirements set by the Transport Economic Regulator.

4.     Regulated Markets: Any market within the transport sector where a single operator controls more than 70% of the market or where the preconditions for efficiency and cost-effectiveness do not exist, as determined by the Minister in consultation with the Regulator.

5.     Entities Seeking Access: Access seekers, which are individuals or organizations seeking to use infrastructure, facilities, or resources owned by another entity, must follow the procedures for negotiating access agreements and obtaining access approval from the Regulator.

6.     Regulatory Authorities: Other regulatory authorities that have jurisdiction over transport matters must coordinate with the Transport Economic Regulator to ensure consistent application of the Act.

The Economic Regulation of Transport Act, No. 6 of 2024, aims to consolidate the economic regulation of transport within a single framework and policy. It establishes the Transport Economic Regulator and the Transport Economic Council, and makes consequential amendments to various other Acts.

Key Sections and Provisions

Chapter 1: Interpretation, Purpose, and Application

• Definitions and Interpretation: Provides definitions for terms used in the Act.
• Purpose: Promotes a competitive, efficient, and viable transport sector contributing to economic growth and development.
• Application: Applies to markets, entities, or facilities in the transport sector subject to economic regulation by the Minister.

Chapter 2: Access to Rail Infrastructure

• Access Costs and Agreements: Details the determination of access costs and the review of access agreements.
• Types of Access Requests: Specifies types of access requests and associated fees.
• Approval Process: Outlines the process for requesting and obtaining access approval from the Regulator.

Chapter 3: Economic Regulation of Transport Facilities and Services

• Price Regulation: Establishes methods for determining price controls for regulated entities.
• Economic Oversight: Sets requirements for information disclosure, regulatory accounting, and handling complaints against regulated entities.
• Complaint Investigations: Details the process for investigating complaints and issuing compliance notices.

Chapter 4: Establishment of Institutions

• Transport Economic Regulator: Describes the establishment, governance, and functions of the Regulator.
• Transport Economic Council: Details the establishment, membership, and functions of the Council.
• Administrative Matters: Covers finances, remuneration, and reporting requirements for the Regulator and Council.

Chapter 5: Enforcement of Act

• Investigation Powers: Grants powers to inspectors and investigators to conduct investigations.
• Offences and Penalties: Defines offences related to the Act and prescribes penalties.

Chapter 6: General Provisions

• Amendments and Transitional Arrangements: Lists consequential amendments to other Acts and transitional provisions for implementing the Act.

Schedules

• Schedule 1: Details consequential amendments to the National Ports Act, Airports Company Act, Air Traffic and Navigation Services Company Act, National Land Transport Act, and The South African National Roads Agency Limited and National Roads Act.
• Schedule 2: Provides transitional provisions for the continuation of tariffs, handling of appeals and complaints, and the transition of the Ports Regulator to the new framework.

COMPLIANCE OBLIGATIONS:

Under the Economic Regulation of Transport Act, organizations in the transport sector have several compliance obligations to ensure they adhere to the regulations set forth by the Act. Here are the key compliance obligations:

1. Price Regulation

• Submit Price Control Proposals: Regulated entities must submit proposals for price controls to the Transport Economic Regulator for approval. These proposals should include tariffs, charges, fees, and other pricing methods.
• Adhere to Approved Price Controls: Once approved, entities must comply with the price controls and any conditions imposed by the Regulator. They must not charge more than the maximum prices established.

2. Information Disclosure

• Provide Statistical Information: Entities must regularly submit statistical information related to the transport facilities or services they provide.
• Forecasts and Development Plans: Entities must provide forecasts of demand and development plans for the facilities they operate.
• Material Changes: Any material changes in the control of persons licensed to operate facilities or provide services must be reported to the Regulator.

3. Regulatory Accounting and Disclosure

• Financial Reporting: Entities must prepare and present financial and other relevant information according to the standards set by the Regulator.
• Independent Reviews: The Regulator may require an independent review of the financial information submitted by the entities.

4. Access to Infrastructure

• Negotiate Access Agreements: Entities must negotiate access agreements with infrastructure owners in good faith and submit these agreements to the Regulator for approval.
• Comply with Access Costs: Entities must adhere to the access costs determined by the Regulator and ensure that access agreements are consistent with the Act.

5. Complaint Handling

• Respond to Complaints: Entities must address complaints filed against them regarding issues such as refusal to issue licenses, discriminatory access to facilities, and failure to meet service standards.
• Cooperate with Investigations: Entities must cooperate with investigations conducted by the Regulator and comply with any compliance notices issued.

6. Compliance with Directives and Notices

• Follow Compliance Notices: Entities must comply with compliance notices issued by the Regulator, which may include steps to rectify non-compliance and penalties for failure to comply.
• Implement Directed Price Control Reductions: If directed by the Regulator, entities must implement price control reductions as specified.

7. Confidential Information

• Protect Confidential Information: Entities must handle confidential information in accordance with the Protection of Personal Information Act (POPIA) and the Promotion of Access to Information Act (PAIA).

8. General Compliance

• Adhere to Regulations: Entities must comply with all regulations made under the Act, including those related to the timing, manner, and form of notices and public submissions.
• Avoid Prohibited Conduct: Entities must avoid any prohibited conduct as defined by the Act, such as charging more than the allowed price or engaging in anti-competitive practices.

9. Annual Fees

• Pay Annual Fees: Entities must pay annual fees determined by the Minister to cover the costs of the Regulator and the Transport Economic Council.

001.   Definitions.

(Date of commencement of s. 1: 1 April, 2025.)

002.   Interpretation

(Date of commencement of s. 2: 1 April, 2025.)

003.   Purpose of Act

(Date of commencement of s. 3: 1 April, 2025.)

004.   Application of Act

(Date of commencement of s. 4: 1 April, 2025 excluding sub-s. (1): to be proclaimed.)

005.   Determination of access costs and review of access agreements

(Date of commencement of Ch. 2 (ss. 5-10): to be proclaimed.)

006.   Types of access requests and access fees

(Date of commencement of Ch. 2 (ss. 5-10): to be proclaimed.)

007.   Contents of access agreements and notification to Regulator

(Date of commencement of Ch. 2 (ss. 5-10): to be proclaimed.)

008.   Requests for and consideration of access approval by Regulator

(Date of commencement of Ch. 2 (ss. 5-10): to be proclaimed.)

009.   Decision on access approval

(Date of commencement of Ch. 2 (ss. 5-10): to be proclaimed.)

010.   Cession, transfer or assignment of access rights

(Date of commencement of Ch. 2 (ss. 5-10): to be proclaimed.)

011.   Determination of price controls

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

012.   Extraordinary review of price controls

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

013.   Information from regulated entities

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

014.   Regulatory accounting and disclosure requirements

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

015.   Complaints against regulated entities

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

016.   Direct referrals to Council

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

017.   Consideration of complaints by Regulator

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

018.   Outcome of investigation

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

019.   Consent orders

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

020.   Issuance of compliance notices

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

021.   Directed price control reduction

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

022.   Right to appeal to Council or apply for review

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

023.   Procedure at Council hearings

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

024.   Right to participate in hearing

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

025.   Powers of Council at hearing

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

026.   Rules of procedure

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

027.   Witnesses

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

028.   Decision at end of hearing

(Date of commencement of Ch. 3 (ss. 11-28): to be proclaimed.)

029.   Establishment of Transport Economic Regulator

(Date of commencement of s. 29: 1 April, 2025.)

030.   Governance of Transport Economic Regulator

(Date of commencement of s. 30: 1 April, 2025.)

031.   Qualifications for Board membership

(Date of commencement of s. 31: 1 April, 2025.)

032.   Conduct and conflicts of Board members

(Date of commencement of s. 32: 1 April, 2025.)

033.   Resignation, removal from office, and vacancies

(Date of commencement of s. 33: 1 April, 2025.)

034.   Regulator’s executive structures

(Date of commencement of s. 34: 1 April, 2025.)

035.   Chief Executive Officer

(Date of commencement of s. 35: 1 April, 2025.)

036.   Appointment of Executive Officers

(Date of commencement of s. 36: 1 April, 2025.)

037.   Resignation or removal of Executive Officers

(Date of commencement of s. 37: 1 April, 2025.)

038.   Functions of Regulator

(Date of commencement of s. 38: 1 April, 2025.)

039.   General provisions concerning Regulator

(Date of commencement of s. 39: 1 April, 2025.)

040.   Development of codes of practice relating to Act

(Date of commencement of s. 40: 1 April, 2025.)

041.   Promotion of legislative and regulatory reform

(Date of commencement of s. 41: 1 April, 2025.)

042.   Research and public information

(Date of commencement of s. 42: 1 April, 2025.)

043.   Relations with other regulatory authorities

(Date of commencement of s. 43: 1 April, 2025.)

044.   Advice and recommendations to Minister

(Date of commencement of s. 44: 1 April, 2025.)

045.   Minister may call for inquiries or investigations

(Date of commencement of s. 45: 1 April, 2025.)

046.   Establishment of Transport Economic Council

(Date of commencement of s. 46: 1 April, 2026.)

047.   Council members

(Date of commencement of s. 47: 1 April, 2026.)

048.   Council functions and procedures

(Date of commencement of s. 48: 1 April, 2026.)

049.   Conflicting interests

(Date of commencement of s. 49: 1 April, 2025, except application to the Council: 1 April, 2026.)

050.   Finances

(Date of commencement of s. 50: 1 April, 2025, except application to the Council: 1 April, 2026.)

051.   Minister to determine annual fees to be paid by regulated entities

(Date of commencement of s. 51: 1 April, 2025, except application to the Council: 1 April, 2026.)

052.   Board and Council members remuneration

(Date of commencement of s. 52: 1 April, 2025, except application to the Council: 1 April, 2026.)

053.   Reviews and reports by Regulator and Council

(Date of commencement of s. 53: 1 April, 2025, except application to the Council: 1 April, 2026.)

054.   Regulations

(Date of commencement of s. 54: 1 April, 2025, except application to the Council: 1 April, 2026.)

055.   Appointment of inspectors and investigators

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

056.   Subpoena

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

057.   Authority to enter and search under warrant

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

058.   Powers to enter and search

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

059.   Conduct of entry and search

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

060.   Claims that information is confidential

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

061.   Powers of Court

(Date of commencement of Ch. 5 (ss. 55-69): to be proclaimed.)

062.   Breach of confidence

063.   Hindering administration of Act

064.   Offences relating to Regulator and Council

065.   Offences relating to prohibited conduct

066.   Penalties

067.   Civil actions and jurisdiction

068.   Limitations of bringing action

069.   Serving documents

070.   Consequential amendments and transitional arrangements

(Date of commencement of s. 70: to be proclaimed.)

071.   Short title and commencement

(Date of commencement of s. 71: 1 April, 2025.)

SCHEDULE 1 CONSEQUENTIAL AMENDMENTS

(Date of commencement of Sch. 1: to be proclaimed.)

SCHEDULE 2 TRANSITIONAL PROVISIONS

Various commencement dates, please click to view more

001.   Definitions

(Date of commencement of item 1: to be proclaimed.)

002.   Continuation of tariffs in force at effective date

(Date of commencement of item 2: 1 April, 2025.)

003.   Appeals and complaints

(Date of commencement of item 3: to be proclaimed.)

004.   General preservation of regulations, rights, duties, notices and other instruments

(Date of commencement of item 4: to be proclaimed.)

005.   Regulations

(Date of commencement of item 5: to be proclaimed.)

006.   Transition of Ports Regulator

(Date of commencement of item 6: to be proclaimed.)

007.   Interim administrative arrangements for Council

(Date of commencement of item 7: 1 April, 2026.)

LINK TO FULL NOTICE

Economic Regulation of Transport Act: Proclamation by the President of the Republic of South Africa [English/ isiZulu]

G 51623 P 224

19 November 2024

51623pr224.pdf

COMPANIES ARTICLES

South Africa: 15 November deadline for submission of Trust Beneficial Owner Registers

Overview

• Trusts must submit a register with prescribed information regarding beneficial owners to the Master of the High Court.
• The deadline for the submission of beneficial owner registers is 15 November 2024.
• Failure by a trustee to submit the beneficial owner register to the Master is an offence which, on conviction, could result in a fine of up to ZAR 10 million and/ or imprisonment for a period of up to five years.

In April 2023, the Trust Property Control Act (TPCA) was amended to inter alia compel trusts to submit a register with prescribed information regarding beneficial owners (BO Register) to the Master of the High Court.

These rules, as well as rules regarding the disclosure of beneficial ownership in respect of assets owned by companies, were introduced to address deficiencies identified by the Financial Action Task Force (FATF) when greylisting South Africa.

While the trust rules came into effect on 1 April 2023, neither the TPCA nor the Master of the High Court at the time stipulated a deadline for the submission of the BO Registers. As trusts have apparently been slow to comply with this requirement, the website of the Master has recently been updated and now reflects 15 November 2024 as the deadline for the submission of BO Registers.

As the failure by a trustee to submit the Register to the Master is an offence which, on conviction, could result in a fine of up to ZAR 10 million and/ or imprisonment for a period of up to five years, trustees should ensure that they comply with their obligations in respect of the submission of the BO Register.

Whether such sanctions will actually be enforced by the Master in practice remains to be seen, but we would nevertheless recommend that trustees look to settle and submit their BO Registers as soon as reasonably possible (even if after the deadline) for sake of compliance.

While the definition of a beneficial owner is not that clear, as a minimum, the beneficial owners of a trust will include the founder and the trustees. It is important to note that beneficiaries are not automatically included in the definition of a beneficial owner.

Aneria Bouwer and Samir Ellary

Bowmans

See TRUST CRMP and details on how to submit BO register to the Master attached.

CONSTRUCTION ARTICLES

Construction mafia disrupts projects worth R63bn in five years Sarupen

The construction industry, which contributes about 3% to GDP and employs more than 1.3-million South Africans, is under threat from the construction mafia, which has disrupted more than 180 projects worth R63bn since 2019. It uses tactics such as extortion, intimidation, violence and sabotage.

Those, said deputy finance minister Ashor Sarupen, were not merely operational challenges but represented a critical stress test for SA’s economic governance.

Demands for up to 30% of contract value undermined the integrity of procurement systems and delayed critical infrastructure delivery, Sarupen said at the National Construction Summit in Durban on Tuesday.

“Construction projects also have an unmatched multiplier effect. For every R1m invested in construction, more than three jobs are created. This is the highest multiplier across all sectors in our economy,” said Sarupen.

The sector added 176,000 jobs just in the third quarter of 2024.

He emphasised that the government had identified infrastructure development as a cornerstone of economic recovery, with the 2024 medium-term budget policy statement reaffirming this commitment to shifting government spending from consumption to investment.

A STRATEGIC OPERATION WAS CONDUCTED YESTERDAY, AND AS A RESULT THREE MALES WERE ARRESTED

“This aligns with the president’s call to transform SA into a ‘construction site’ to drive inclusive growth and job creation,” he said.

To address challenges in the sector, the government is pursuing a three-pronged strategy: reforming public procurement, expanding publicprivate partnerships (PPPs) and increasing infrastructure investment. These include enabling government entities to pay subcontractors directly, eliminating the delays and exploitation often experienced under the existing system; streamlining approval processes to reduce delays in PPP projects; and mobilising private sector funding to augment limited public resources.

Police minister Senzo Mchunu said at the summit that KwaZulu-Natal, Gauteng, the Western Cape and the Eastern Cape had the highest rates of all crime, including rape, murder, gender-based violence and extortion.

“These provinces also have the most documented instances of criminal syndicates impeding project construction or execution,” he said.

It was crucial to package crimes on construction sites with others such as extortion, illicit guns, drug trafficking, mass transit crimes, critical infrastructure and other economic crimes, he said.

“If I could share just one success story. At the George Mukhari Hospital in Garankuwa, Gauteng, there is a project under way: the building of an oncology unit. Now, a group of alleged community members stopped the site, assaulted the site manager, damaged the property and stopped delivery trucks from delivering. A case was opened on November 9, with charges listed as assault, intimidation and extortion and trespassing.

“A strategic operation was conducted yesterday, and as a result three males were arrested. We are not going to spend a long time condemning and lamenting on this; we are rather inviting our brothers and sisters who are on the wrong side to join us in constructing a SA we want.”

Mchunu said that crime intelligence played a critical role in identifying emerging threats, gathering intelligence, and locating suspects linked to these syndicates while the organised crime unit made sure that was carried out.

“In addition to specialised investigative teams, visible policing combat units have been deployed to hotspot areas for patrols and crime prevention to stabilise the situation and address the violence associated with these syndicates,” said Mchunu.

“While we have made significant strides, we recognise that the SAPS cannot tackle this challenge alone,” he said. “The construction sector is complex, and the crime issues we face here demand a multifaceted approach. To this end, SAPS partners with a wide range of internal and external stakeholders, including state-owned entities such as Eskom, Telkom, Transnet and Gautrain, as well as government departments like the NPA and the department of public works and Infrastructure.

“The collaboration also extends to private sector partners, including Business Against Crime SA and the SA Revenue Protection Association. Through these partnerships, SAPS fosters a strong working relationship, ensuring constant monitoring and alignment of strategies to maintain operational focus.”

Sashni Pather

Business Day

COUNTERFEIT GOODS ARTICLES

Lucky Star sets record straight on fake goods

OCEANA Group, the owner of Lucky Star, has set out to clarify inaccurate information about alleged counterfeit canned pilchards recovered in Daveyton, Gauteng, during a police operation.

This comes after police in that province detained seven undocumented migrants, aged 18 to 29, during a search at a facility whose employees were purportedly packing and modifying dates on expired Lucky Star canned fish.

“On November 11, a joint operation between Crime Intelligence from Zamdela, Sasolburg, and SAPS Kliprivier, yielded significant results in the fight against counterfeit goods,” said police spokesperson, Tintswalo Sibeko, at the time.

Lucky Star yesterday said investigators and third-party experts have proven it was not their product.

“So far investigations have established that an international manufacturer produced the canned pilchards under the Woolworths brand.

“The retailer imported and received them but later rejected the consignment and asked the supplier to collect it,” said the company.

It added that after collection, some of the cargo was illegally relabelled as Lucky Star and repackaged into Woolworths boxes.

• Examine the quality of the label. Only high-quality paper, specific to the product, is utilised.

• Counterfeit products labelling is often of lower quality.

• Check the print’s clarity. Any smudge or colour changing may indicate a fraudulent product.

• Check to see whether the label is crooked or not properly affixed to the can.

• Check the unique product code and best-before date, which are ink-jetted on the end of the can.

• Check the barcode’s clarity and readability.

• Examine the unique, traceable codes written on the label adhesive flap.

• Check pallets for security tape and ID tags. Lucky Star cans do not feature ring pulls or easy-open lids for canned pilchards.

Xolile Mtembu

Cape Argus

Experts urge tougher penalties

SA’s legal system is under scrutiny for its handling of counterfeit goods cases, with experts warning the existing punitive measures fail to reflect the severity and societal impact of these crimes. According to Hashiem Logday, an associate at Adams & Adams, this clandestine offence is not merely an economic crime but one that endangers public safety.

SA’s legal system is under scrutiny for its handling of counterfeit goods cases, with experts warning the existing punitive measures fail to reflect the severity and societal impact of these crimes.

According to Hashiem Logday, an associate at Adams & Adams and an expert in civil and criminal litigation in anticounterfeiting, this clandestine offence is not merely an economic crime but one that endangers public safety.

Law enforcement agencies were too lenient with perpetrators and that leniency does not deter offenders or address the broader implications of the problem, he said.

The Counterfeit Goods Act provided penalties for dealing in counterfeit goods that include fines of up to R5,000 per item or imprisonment of up to three years for first convictions. Repeat offenders faced slightly higher fines and longer sentences, he said.

However, he said, in practice, courts often imposed lenient sentences, undermining the act’s deterrent effect.

“At first glance, the penalties provided for appear to be adequate and indicative of an aggressive approach towards offenders dealing in counterfeit goods,” he said.

“A fine of R500,000 could be imposed on a first-time offender found in possession of 100 counterfeit T-shirts. In practice however, the reality is far from this when sentences are imposed. From looking at past cases, the courts have adopted a more lenient approach when it comes to sentencing accused persons in cases dealing with contraventions of the [act].”

Logday said many cases

LAW ENFORCEMENT AGENCIES ARE TOO LENIENT WITH PERPETRATORS AND THAT LENIENCY DOES NOT DETER OFFENDERS

Hashiem Logday

Associate at Adams & Adams

were settled with small admission-of-guilt fines, perpetuating the perception that counterfeiting is a “victimless” crime.

“If closer attention is paid to the nature of counterfeit goods being seized by the authorities — including counterfeit sanitary pads, engine oil and consumable products — it becomes more evident that the dealing in counterfeit goods could also affect our safety and wellbeing directly. We are the unsuspecting victims. Does the punishment fit the crime? Perhaps not,” he said.

FALSE LABELS

Woolworths recently fell victim to counterfeiting crimes. The group confirmed it was investigating a counterfeit operation uncovered by police, involving expired canned pilchards falsely labelled in Woolworths-branded cartons. Seven suspects were arrested in Gauteng where equipment to alter expiration dates were found.

Woolworths said it suspected the counterfeit products originated from a rejected international shipment and emphasised that its products should only be bought directly from its stores or online. “In the event of a product being rejected, it becomes the immediate responsibility of the supplier to collect and dispose of the stock from our warehouse responsibly. We have launched our own investigation to determine why this process was not adhered to in this instance,” it said.

Michael Lamont, a partner at Spoor & Fisher and a specialist in combating counterfeiting, said counterfeit trade was fuelled by demand for cheaper goods in economically strained regions.

He said this market drained tax revenue, caused job losses, damaged legitimate businesses and funded criminal networks. Enforcement agencies, including the SA Revenue Service (Sars) and SA Police Service, faced resource and expertise constraints, making it difficult to dismantle sophisticated operations.

Tax Justice SA’s Yusuf Abramjee has the same sentiments as Lamont and Logday.

He said the state lost more than R100bn annually due to these practices. Organised crime syndicates profited from this illicit wealth, using it to fund luxurious lifestyles and other criminal enterprises, including human trafficking and terrorism, he said. “The R100bn a year — that’s R250m every single day — is a breathtaking figure. It alone would pay for a basic income grant to lift half the population off the breadline.

“Conservative estimates show that Sars is losing more than R20bn annually from illicit cigarette sales alone. In truth, it is probably losing much more. More than one in five alcoholic drinks sold in SA is now illicit, robbing the economy of another R20bn a year.”

Abramjee said the broader impact of counterfeiting and related crimes undermined legitimate businesses and endangered public safety. He warned that these activities eroded the rule of law and fuelled other crimes, including cable theft, illegal mining and construction-related extortion.

“We need more inspections and better enforcement of laws to guard ourselves against the counterfeiters.

“When you buy a counterfeit product, you’re buying into organised crime,” he said.

Nompilo Goba

Business Day

DATA PRIVACY ARTICLES

NAMIBIA

Securing Data Privacy: Key highlights of Namibia’s Data Protection Bill, 2023

Namibia currently lacks comprehensive data protection legislation in line with the constitutional right to privacy and other laws such as the Labour Act and the Financial Intelligence Act, leaving personal data processing unregulated. Namibia’s Data Protection Bill, 2023 (“DPB”) is still in its early legislative steps and must undergo further parliamentary review before it is passed into law. Although the Bill is not yet in force, drawing from the experience of neighbouring countries and other jurisdictions which have active privacy laws, organisations in Namibia must take proactive steps to pre-empt such laws, and as a starting point to examine its implications due to the significant role data protection and digital privacy play currently. The proposed legislation will introduce pivotal changes to our data privacy laws and how organisations operate.

Who does the DPB apply to?

The DPB aims to regulate the processing of personal data, whether automated or manual, as long as the data is organised and accessible by specific criteria. The DPB mandates transparent, fair and lawful data processing, primarily based on individual consent. It imposes certain obligations on controllers, processors and third parties regardless of their location. It applies to data processing activities that concern individuals within Namibia.

As the DPB is not industry-specific and given its wide application, the DPB will have a profound and direct impact on all private and public organisations in Namibia.

Role Players

The DPB creates several new role players including (i) Data Subjects, (ii) Controllers, (iii) Processors and (iv) the Data Protection Supervisor Authority.

Data Subjects are individuals whose data is processed, Controllers are entities deciding data processing purposes and means. Processors are those processing data on behalf of the Controllers, and the Data Protection Supervisory Authority is a new independent body with powers to enforce compliance.

The DPB also, however, makes provision for a “third party”, meaning any person, other than the data subject, the controller, the processor, and anyone who, under the direct authority of the controller or the processor, is authorised to process personal data.

The DPB distinguishes between “personal data”, which can identify an individual (e.g., name, ID number, IP address), and “special categories of personal data”, including sensitive information such as race, political opinions, religious belief, trade union membership, or their criminal records. Processing includes the collection, recording, organising, structuring, storing or preserving, combining, adapting or altering, accessing, retrieving or consulting, transmitting, disclosing or making available, restricting, erasing, or destructing, or the carrying out of logical and/or arithmetical operations on such data. Given the broad description of these definitions, all organisations in one form or another process personal data and fall within the ambit of the DPB.

 General Prohibitions on the Processing of Personal Data  

The processing of special categories of personal data is generally prohibited unless the individual concerned gives their consent or another exemption applies. The same goes for processing a child’s data. The processing of children’s personal information must be performed with sufficient guarantees to ensure that the processing of the child’s data does not adversely affect their individual privacy to a disproportionate extent, or result in the data concerned being made public without the consent of a competent person. In such cases, the onus rests on the controller and/or the third party to prove that consent has been obtained by the data subject or competent person.

General Limitations on the Transborder Flow of Personal Data

The DPB further imposes a limitation on the transborder flow of personal data. The conditions for transferring personal data to another country include ensuring that the recipient is subject to laws or agreements that provide a level of protection similar to Namibian standards, obtaining the data subject’s consent, or if the transfer is necessary for the performance of a contract involving the data subject.

Compliance and Enforcement

Non-compliance with the DPB can lead to severe consequences, including fines, imprisonment, or both.

The Data Supervisory Authority (“The Authority”) is authorised to issue compliance assessments to investigate compliance with the DPB. Any person may submit a claim to the Authority, alleging interference with the protection of the personal data of a data subject. The Authority, upon receipt of a complaint, may conduct a full investigation. The Authority may also secure a settlement between the parties concerned, where it appears from the complaint that such settlement and assurance against the repetition of such action is appropriate.

During an investigation, the Authority can apply for a warrant if there are reasonable grounds for suspecting that a controller is processing data unlawfully. The Authority is also empowered to make public any information relating to the personal data management practices of a controller that has been the subject of an assessment if it considers it is in the public interest.

The Authority may also refer a complaint to another regulatory body if the Authority considers that the matter befalls the jurisdiction of another regulatory body.

Conclusion

Overall, the Data Protection Bill, 2023 represents a critical step towards establishing comprehensive data protection in Namibia. By introducing clear guidelines and stringent enforcement mechanisms, the DPB aims to safeguard personal data, ensuring that individuals’ privacy is respected and protected in the digital age. As the DPB progresses through the legislative process, its potential to significantly enhance Namibia’s data privacy landscape is evident, making it essential for stakeholders to understand and prepare for the forthcoming changes.

The adoption of the DPB presents an opportunity for businesses to build trust, safeguard their reputation and align with global best practices. We encourage organisations to be early adopters of these privacy interventions, including the adoption of policies, training of staff, conducting privacy impact assessments and aligning privacy with cybersecurity, especially as this will assist organisations in protecting their data assets – which have been dubbed the ”new oil”.

By Ridwaan Boda , Vanessa Boesak , Naledi Ramoabi AND Marsha Shaanika

ENSafrica

ELECTRICITY ARTICLES

SOUTH AFRICA

Electricity law delay raises concerns

A tussle over municipalities’ role in electricity distribution has delayed the promulgation of the long-awaited Electricity Regulation Amendment Act, raising the risk that crucial reforms to create a more competitive electricity market could be delayed.

The municipalities have objected to a last-minute limitation imposed by the new act on the role they will play in distribution and reticulation.

Historically, they have been responsible for much of the distribution of electricity to households and businesses in their areas and have relied on this heavily to raise revenue.

But analysts have warned of negative consequences for investment if the dispute cannot be resolved.

Grové Steyn, MD of Meridian Economics, warned that unless resolved, this matter could stall the new legislation “which sets out far-reaching reforms of SA’s electricity sector, including the establishment of a competitive electricity market”, as the presidency described it.

That would send a signal to investors that SA was not serious about moving towards a competitive wholesale electricity market, said Sue Röhrs, expert in energy law from the law firm Power Law.

The new definition of “reticulation” that is at the heart of the dispute is a last-minute change that was not subjected to public participation and goes to the heart of the financial survival of municipalities.

The SA Local Government Association (Salga) and the department of electricity & energy have been given 90 days to present proposals that will accommodate municipalities and prevent court action.

“We are 30 days into the 90 days,” Salga head of energy and electricity generation Nhlanhla Ngidi told Business Day.

President Cyril Ramaphosa signed the Electricity Regulation Amendment Act into law on August 16, but it will come into effect only when the date of commencement has been promulgated in the Government Gazette.

The presidency said in August that the new legislation would open pathways to greater competition and reduced energy costs, as well as increasing investment in new generation capacity to achieve energy security. It also established the new independent transmission company as the custodian of the national grid.

But after the president assented to the legislation, Salga petitioned him to relook at it, including the definition of “reticulation”.

The Association of Municipal Electricity Utilities submitted a separate petition “due to the seriousness of the matter”, association strategic adviser Vally Padayachee said. Other petitioners included the City of Cape Town and the City of Tshwane.

Ngidi said the new definition would reduce the constitutional powers of municipalities to distribute electricity to large power users with connections up to 132kV to only 11kV.

Merilynn du Plessis, attorney at Hahn & Hahn Attorneys, said municipalities were concerned that the amended definition would only allow them to “do the very last leg, which is below 11kV, being your lowest voltage”.

Under the new definition municipalities would also not be able to trade in electricity, which would open the reticulation market to other competitors.

Salga supported Eskom’s recent objection to applications to national energy regulator Nersa from four traders for licences to trade in electricity countrywide, Ngidi said.

Eskom argued that its distribution licences granted it the exclusive right to trade electricity in its licensed distribution areas and announced it would take Nersa’s subsequent approval of the applications on judicial review.

Electricity sales are the biggest source of income for most municipalities and reducing them to network operators serving only small power users is expected to be devastating for their finances.

MISTAKE

Steyn emphasised the importance of the promulgation of the act. “We must get clarity on how the future electricity market will work. Without it, investment will be inhibited.”

Inclusion of the new definition after the bill was passed in the National Assembly was a mistake, Steyn said.

Municipalities were dependent on their income from electricity sales, and it was never the intention to just exclude them, he said.

“There must be a discussion about the way municipalities will function in the new dispensation. There are many problems in municipalities, but this is not the solution,” he said, adding that promulgation must proceed without the contentious clause if possible.

SA Association for Independent Power Producers chair Brian Day said: “We need to get clarity on the distribution industry as a matter of urgency. It is more complex than transmission, and has become urgent for this and trading licences, payment delays by municipalities to Eskom, and so on.”

It would be a tragedy if the promulgation of the act was further delayed due to the issue around municipalities, he said.

Chris Yelland, MD at EE Business Intelligence, said it was important to get the buy-in of major stakeholders like municipalities for the new dispensation. Otherwise they could become obstructive.

Yelland said that while Eskom and municipalities might resist the market reform, there were powerful forces pushing for it, including the National Treasury, Kgosientsho Ramokgopa as minister of electricity & energy, and Operation Vulindlela and the national energy crisis committee situated in the presidency.

Antoinette Slabbert

Business Day

Remodelled draft IRP to be unveiled next week for limited public consultation

A remodelled Integrated Resource Plan (IRP) for electricity will be released to the public next week and is expected to deviate materially from the heavily criticised draft IRP2023, which was published for public comment in January.

Electricity and Energy Minister Dr Kgosientsho Ramokgopa says the revamped document has taken account of changes in the electricity supply industry since the publication of the draft IRP2023, as well as the 4 338 stakeholder comments received on the document, including 136 “substantive” comments.

He has also announced that physical and virtual stakeholder engagements will be held from November 25 to 29 with the goal of finalising the update by November 30 and securing Cabinet approval for the final publication of what he calls “IRP2024” in the first quarter of next year.

The document will also have to be considered by the social partners at the National Economic Development and Labour Council ahead of gazetting.

The remodelling work has been conducted by the South African National Energy Development Institute (SANEDI) and will include a single horizon to 2050 – a departure from the draft’s two horizons, covering the period to 2030 and from 2031 to 2050.

SANEDI CEO Dr Titus Mathe says the new document includes revised and updated assumptions, including an increase in the assumed energy availability factor of Eskom’s coal fleet from around 50% to 60%, reviewed grid assumptions, as well as the delayed decommissioning of coal units that were meant to be shut between 2024 and 2030.

The base case will, thus, no longer reflect a continuation of loadshedding, the inclusion of which in the draft IRP2023 raised strong objections.

Mathe indicates that all the revisions will be released only at the first meeting, which is scheduled to take place physically at the Council for Geoscience on Tuesday, November 26.

However, he confirms that gas-to-power continues to feature heavily in the generation mix, especially after 2030, while the allocation to wind has also been increased substantially from that which was assumed in the draft IRP2023.

He also indicates that new nuclear will remain a feature of the remodelled plan beyond 2030, despite ongoing concern about the cost of the technology relative to possible alternatives.

While electricity stakeholders are keen for greater IRP certainty, particularly given that the current IRP2019 is considered to be sorely outdated, the truncated nature of the proposed consultation process could raise fresh concern and could even risk being challenged.

By: Terence Creamer

Polity

ENVIRONMENTAL ARTICLES

SOUTH AFRICA

Jail time mooted for CEOs and municipal managers who commit environmental crimes

Jail time — rather than monetary fines — may be necessary to deter corporate and municipal leaders from committing environmental crimes with impunity.

That was the warning from Narend Singh, the deputy minister of forestry, fisheries and the environment, on November 18 at the biennial conference of the Green Scorpions, the government inspectorate charged with enforcing environmental protection laws.

“I take pride in standing alongside the Green Scorpions — those dedicated men and women who are at the forefront of protecting our environment for the benefit of both present and future generations.

“Your relentless efforts ensure that section 24 of our Constitution is not merely an eloquent set of words but a real promise to the people and the flora and fauna of South Africa, that we strive to uphold.”

In his opening address at the four-day conference in the foothills of the KwaZulu-Natal Drakensberg mountains, Singh said the world and South Africa were facing an increasing range of environmental threats, including climate change, the loss of biological diversity and air pollution levels that threatened the health of surrounding communities.

“So, it is crucial that we prioritise the fight against environmental crimes.”

Deviating from the text of his prepared speech, Singh remarked that fines of R5-million, R10-million or R20-million for environmental offences were insignificant for certain offenders.

“We need to see some CEOs and municipal managers in orange overalls,” he said, noting that he met National Prosecuting Authority (NPA) head Shamila Batohi last week and she expressed willingness to work more closely with the Green Scorpions to prosecute environmental crimes.

Singh said he believed it was also crucial for government and international agencies to work more closely to curb transnational organised crime syndicates benefiting from the poaching of rhino horns or the decimation of rare succulent plants.

Rather than targeting the “small fry” local operatives, who were often exploited by foreign syndicates, it was necessary to aim much higher, for people “sitting on the 50th floor” of buildings in distant cities.

“This process must include not only environmental management inspectors from the environmental and water sectors but also essential partners such as the South African Police Service, the National Prosecuting Authority, the State Security Agency, the South African Revenue Service, the Border Management Authority, the Financial Intelligence Centre, the departments of health and mineral resources, and the Interpol National Central Bureau office.”

Similar, determined action was needed to halt the widespread pollution of rivers and beaches by continued flows of untreated sewage from dysfunctional municipal wastewater treatment works.

Later, at a media briefing, Singh returned to the issue of sewage pollution by municipalities and appeared to acknowledge criticism about the futility of fining municipalities when ratepayers’ funds were used to pay such fines.

But tough talk can be cheap.

In response to questions about the lengthy delay in setting a court appearance for the Mumbai-based UPL pesticides and agrochemicals giant in the aftermath of the July  2021 air, ground, water and sea pollution north of Durban, Singh was not able to provide a clear answer.

Several criminal cases were opened against UPL by the Green Scorpions at the Verulam Police Station more than three years ago in case number CAS 06/09/2021, but no court date has yet been set in connection with alleged crimes by the company.

Daily Maverick asked the deputy minister to comment on the possibility that the delay was due either to investigation shortfalls by the Green Scorpions or the NPA or because of political interference to go softly against a major foreign investor.

Singh replied that he was sure the Green Scorpions had “done their work”, though he was unable to comment on why the NPA had not yet taken the matter to court. He suggested this was an issue that senior members of his department could “take up” with the NPA.

“As for ‘political interference’, there is certainly nothing from me or from the [KZN MEC for environmental affairs, Rev Musa Zondi]. Vanessa Bendeman, the department’s deputy director-general for regulatory compliance, said she was hopeful that she could provide clarity on the NPA’s position on the UPL issue within the next week or so.”

Frances Craigie, the head of the Green Scorpions, suggested that the UPL matter was “quite a unique case” due to the fact that the chemical fire and explosion were the result of the July 2021 unrest.

“I do think they [the NPA] are considering it, and it’s taking a bit of time because of the complexities of the case… In the early stages of the investigation, we were asked to do a few additional things, but I think Vanessa and I can follow up [with the NPA].”

By Tony Carnie

Daily Maverick

Cape Town may pump as much sewage into the sea as it likes

Environment minister has lifted quantity restrictions on the city’s three marine outfalls

An unlimited volume of untreated sewage is now allowed to be pumped out to sea by the City of Cape Town, following a decision by environment minister Dion George.

This was revealed in George’s parliamentary reply to a question posed by ActionSA MP Malebo Kobe on what steps the Department of Forestry, Fisheries and the Environment (DFFE) was taking against the City of Cape Town releasing more than 30-million litres of raw sewage into the marine reserve per day.

George, in his response in September, said Cape Town had coastal waters discharge permits for three marine outfalls (underwater pipes through which sewage is pumped into the ocean), situated in Green Point, Camps Bay and Hout Bay. The permits allow the City to discharge 25-million, 11.3-million, and 5-million litres of sewage into the sea per day from each of these outfalls respectively. The only treatment the sewage receives before being released into the ocean is to be pumped through a sieve to remove solids.

But the granting of these discharge permits, which set limits on the volumes of sewage that can be pumped, as well as limits for elements such as nitrogen, mercury and cyanide amongst others, have been appealed by the public and various organisations, such as the National Sea Rescue Institute.

“These three permits are all subject to ongoing appeals,” stated George. “However, an interim decision was taken on 28 August 2024, in which the effluent quantity (in other words, flow) limits in the CWDPs (Coastal Waters Discharge Permits) were suspended pending the outcome of the appeals.” He added that the City of Cape Town “is not limited to the daily discharge limits”.

Meanwhile, the City had already been exceeding the sewage quantity limits set by the existing permits.

According to water and sanitation mayco member Zahid Badroodien, the average discharge during October was 1.8-million litres per day above the permit limit, and was 700,000 litres per day above the permit limit for Green Point. The Camps Bay outfall remained well under the discharge volume limit.

The appeals

The permit for the Hout Bay outfall was granted by the DFFE in 2019, while the Green Point permit was granted in December 2022, and the Camps Bay permit in January 2023. Prior to them being issued, the outfalls had been operating under a general authorisation from the national Department of Water and Sanitation.

But when the City received the discharge permits, it did not notify the public and interested and affected parties, which effectively denied the public the right to appeal. The matter only became known when the NSRI asked the City in January last year about the status of the permits.

The subsequent appeals to the DFFE by the NSRI, ActionSA, Capexit, Stefan Smit, and Tracey Satt, were on the basis that, among others, the sewage was being discharged into a Marine Protected Area; pumping untreated sewage into the ocean contravened the constitutional right to a healthy environment; and there was no evidence a proper risk assessment or public participation process had been conducted.

This led to former DFFE minister Barbara Creecy ordering the City to conduct a new public participation process, which closed on 21 November last year. These appeals have still not been finalised.

This is despite Creecy having stated, in her 2023 decision to allow the appeals, that “the discharge of sewage into the ocean can have significant impacts on the environment and public health”.

Criminal case

Documents last year obtained by ActionSA through the Promotion of Access to Information Act showed the City had violated the conditions of its permit for the Hout Bay outfall by exceeding discharge volumes on 104 out of 181 days during the first six months of 2023. The City had also failed to establish a Permit Advisory Forum, among other conditions of the permit.

As a result ActionSA opened a criminal case against the City for contravening the Integrated Coastal Management Act.

But the City wasn’t just non-compliant with the Hout Bay outfall permit. George also revealed that the DFFE had in February this year – prior to George being appointed minister – issued compliance notices to the City for contravening “certain conditions of the permits” for each of the City’s three outfalls. He said in respect of the Hout Bay outfall, a criminal case had been investigated and a docket sent to the National Prosecuting Authority (NPA).

The NPA has failed to respond to questions about the charges and whether they will be prosecuted.

Environmental concerns

A 2017 report by the CSIR commissioned by the City of Cape Town, and to which the City in its presentations often refers in response to criticism of the marine outfalls, states the negative impact of discharging sewage into the aquatic ecosystem depends on the ecosystem’s assimilative capacity.

“The assimilative capacity is essentially a receiving environments ‘pollution diet’ – too much pollutant loading combined with inefficient dilution and dispersion and deleterious effects will manifest,” states the report.

It goes on to state that while the “high-energy marine environment” has a higher capacity to assimilate sewage than a sheltered water body such as an estuary, “of importance is the volume of effluent discharged”.

It states that while the concentration of contaminants contained in sewage may not cause the death of marine organisms, “their persistent introduction may overwhelm the assimilative capacity of a receiving environment in the long-term and result in chronic toxicity (non-lethal effects, such as reduced reproductive potential and growth of aquatic organisms)”.

Environmental activist Caroline Marx, who sits on the City’s mayoral advisory committee for water quality, said marine outfalls are designed with a defined assimilative capacity for the environment.

“It is not understood why the minister has decided to completely ignore this so-called safe limit and allow the discharge of unlimited quantities of raw sewage for an undefined period.”

Marx said additionally, the sewage was being released into a Marine Protected Area. The Table Mountain National Park Marine Protected Area extends from Granger Bay, around Cape Point to St. James in False Bay.

She said it was also concerning that the City and the DFFE appeared to ignore the City’s non-compliance with the conditions of the Hout Bay discharge permit for four years, until ActionSA laid a criminal charge.

City growing

Badroodien said the previous permits under the Department of Water and Sanitation granted in 2011 allowed up to 17.5-million litres of sewage to be discharged per day in Hout Bay and up to 85-million litres per day off Green Point.

He said the new permits, under the DFFE, make no allowance for storm water when it rains, or higher volumes cause by peak period flows.

“The reductions that were applied are not in line with the design capacity of each outfall and appear incorrect when one has regard to the City’s growth and most importantly its compliance with the original 2011 permitted volumes,” said Badroodien.

He said the city is growing and so are volumes of sewage, and there was no other option at the moment but to utilise the outfalls.

However, he said the City was looking at developing other options for the future.

GroundUp has previously reported on the City’s study on options such as establishing new waste water treatment works to treat the sewage before releasing it into the ocean, or piping it to existing waste water treatment works.

By Steve Kretzmann

GroundUp

FINANCE ARTICLES

SOUTH AFRICA

R7.7m fine stands as FIC Appeal Board rules against law firm

A firm of attorneys is taking its case against the Financial Intelligence Centre (FIC) to the High Court after the FICA Appeal Board upheld a R7.7-million fine imposed for non-compliance.

The FIC yesterday hailed the Appeal Board’s decision as “definitive”, showing that it endorsed the Centre’s approach to sanctioning designated non-financial businesses and professions (DNFBPs) that do not meet their FICA obligations.

According to the Centre, the decision, handed down last month, is the first outcome of an appeal lodged by a firm of attorneys against an administrative sanction issued by the FIC.

In December 2022, the FIC assumed responsibility for the supervision of all DNFBPs – including legal practitioners – listed under Schedule 1 of the Financial Intelligence Centre Act.

“The FIC has consistently on public platforms pleaded with attorneys to comply with the FIC Act. The outcome of this appeal is a clear message that non-compliance with the FIC Act may have serious consequences,” said Christopher Malan, the FIC’s executive manager for compliance and prevention.

The FIC determined, following an inspection of Kunene Ramapala Incorporated in June 2023, that the law firm had not complied with FICA’s requirements to document, maintain and implement a Risk Management and Compliance Programme (RMCP), and to scrutinise clients against the Targeted Financial Sanctions (TFS) list.

In addition, KR Inc failed to comply with Directives 1, 2, and 4, in that its registration details were not updated on the FIC’s goAML system, and it had shared its log-in credentials.

KR Inc also did not comply with Directive 6 of 2023, which requires certain accountable institutions, including legal practitioners, to file a risk and compliance return (RCR) questionnaire within a specific time frame.

The FIC determined that KR Inc was “grossly negligent and in wilful non-compliance” and in March this year imposed a fine of R7 772 000 in the following respects:

• Failure to scrutinise clients against the TFS list – R3.922m.
• Failure to document, maintain, and implement an RMCP – R3.8m.
• Failure to comply with Directive 6 by not timeously submitting its RCR – R50 000.
• Failure to comply with Directives 1, 2, and 4 – R20 000.

The combined fine exceeded 10% of KR Inc’s turnover for the 2022/23 financial year, and the Centre decided to limit the sanction to not more than 10% of its annual turnover.

Apart from the financial penalty, the FIC issued directives to the appellant to scrutinise and document its new and existing clients in compliance with the TFS list, review its RMCP at various intervals to ensure its relevance in respect of their operations, and comply with Directives 1, 2 and 4 and update its log-in credentials and registration details.

‘Lack of awareness’

KR Inc contended that the financial penalties were excessively harsh and asked the Appeal Board to set them aside or reduce them.

The law firm accepted responsibility for past non-compliance but said this was because of a lack of awareness, not gross negligence. The appellant also argued that it had addressed its compliance issues before the penalties were imposed, claiming the FIC failed adequately to consider its co-operative conduct and mitigating factors, such as its remedial efforts.

KR Inc further submitted, inter alia, that:

• The penalties were disproportionately high, particularly in light of the nature of its non-compliance, which involved a specific conveyancing transaction valued at some R2.822m, for which a penalty of R3.8m was excessive.
• Since it primarily serves organs of state, there is minimal risk that its services could be used for terrorist financing or money laundering.
• It was not in “wilful non-compliance”, because it notified the Centre about technical difficulties in accessing the goAML system.

‘Remediation doesn’t negate penalties’

The FIC contended that KR Inc’s prolonged non-compliance and minimal engagement in addressing the issues warranted the penalties imposed, underscoring that these actions served the FICA’s deterrence objectives.

Among other things, the Centre submitted:

• The law firm had operated since 2012 but registered with the FIC in November 2019, which was nearly seven years late, without a valid explanation beyond claimed ignorance of its compliance obligations.
• Following the inspection, a draft report was issued on 21 July 2023, outlining the KR Inc’s non-compliance with various sections of FICA. The final report on 4 August 2023 confirmed these non-compliance findings and required the appellant to implement specific remedial actions. However, KR Inc failed to comply by the deadline of 4 September 2023.
• The appellant continued to miss subsequent deadlines for submitting required documents, such as the RCR, which was ultimately submitted on 5 February 2024, well past the deadline.

Notably, the FIC said that rectifying non-compliance after enforcement proceedings does not negate the original transgression: “The fact that a transgression has been rectified does not mean that it was not a transgression and cannot and should not be subjected to a sanction.”

Citing case law, the Centre held that penalties are warranted for non-compliance observed during inspections, regardless of subsequent remedial actions.

Demonstrable ‘gross negligence’

The Appeal Board found that KR Inc’s extensive delays in meeting its obligations under FICA, as well as its continued non-compliance despite ample guidance and warnings, demonstrated gross negligence.

KR Inc failed to act promptly even after receiving repeated notifications and assistance from the Centre, leading the Appeal Board to conclude that the appellant’s actions showed “a complete obtuseness of mind” and qualified as “a conscious risk-taking”.

The Appeal Board also dismissed KR Inc’s argument regarding the reduced risk posed by its state-organ clients, emphasising that FICA compliance is mandatory regardless of client risk ratings.

Furthermore, the Board reaffirmed that “an administrative sanction cannot be avoided merely because non-compliance was rectified after the fact”, a point well-established in precedent. Even though KR Inc took remedial actions after the inspection, these were not sufficient to prevent sanctions.

It said the Centre made a conscious decision to cap the sanction at no more than 10% of KR Inc’s annual financial turnover.

“It is a well-established legal principle that the Centre’s use of guidelines in the sanctioning process is legally sound. The guidelines serve to promote consistency, but the Centre is not legally bound to follow them if the facts of a case justify deviation. The Centre took a holistic approach in determining the sanctions, with deterrence being the primary goal,” the Board said.

The Appeal Board concluded that the sanctions were neither “startlingly inappropriate” nor legally flawed. Therefore, it upheld the sanctions and dismissed the appeal.

KR Inc this month instituted an application in the High Court to have the Board’s decision reviewed.

Major ‘instant EFT’ changes for South Africa

The South African Reserve Bank (SARB) has issued a new directive restricting all electronic funds transfer (EFT) credit payment instructions in South Africa, in a bid to protect the National Payment System (NPS) and consumers from fraudulent activity.

In terms of the directive, no person may issue an EFT credit payment instruction on behalf of a payer in the NPS unless that person is registered with the SARB and has obtained informed consent of the payer prior to issuing the instruction.

The reason for the directive is to counter and clamp down on increased usage of screen scraping in South Africa.

Screen scraping is a process used by many payment fintech companies to issue EFT credit payment instructions on behalf of users. A key facet of the process is logging into your online banking through a third party, which is widely discouraged.

Often marketed as ‘Instant EFT’, the process itself can be used legitimately, but can be open to exploitation and is not supported in South Africa.

Despite this, the SARB has noted increased usage of the process by fintechs across various platforms.

A practical example of screen scraping would be:

• A shopper makes a purchase at an online store
• When selecting payment options, they choose ‘Instant EFT’
• The shopper is then redirected to a page where they choose their bank
• They are directed to enter their banking login details
• The shopper then chooses the account to pay from, and then moves on to payment confirmation
• The transaction is completed, and the order is processed

All of this happens on the platform the shopper is using.

In 2020, the SARB, the Payment Association of South Africa (PASA) and the Financial Sector Conduct Authority (FSCA) issued a joint statement warning consumers about the risks associated with instant online EFT payments, particularly in relation to screen-scraping.

They explicitly stated that they do no support this process.

In its latest directive, the SARB outlined a host of issues with it.

“Screen scraping is largely conducted without the informed consent of the payer, the understanding of the implications of sharing the credentials as well as using the branding of clearing system participants without approval,” it said.

“This practice exposes the NPS, including the participants and payers to risks.”

These include:

• Payers are not aware that they are giving their login details to a third party and having them perform transactions on their behalf.
• Payers are not aware of the implications and negative impact of doing so.
• Payers are misled into thinking the process is an ‘instant’ transaction when it is not.
• Payers are not aware of their private data being exposed and exploited.
• Payers are being exposed to potential fraud by rogue entities.
• Payers face financial losses or non-delivery of goods and services, and the EFT credit payments are final and irrevocable.
• Payers may face issues lodging disputes to reverse transactions with their banks.

The SARB has now moved a step further, targeting EFT credit payment instructions as a whole.

Under the directive:

• No person may issue electronic funds transfer credit payment instructions on behalf of a payer in the NPS unless they are registered with the Reserve Bank and have obtained informed consent from the payer.

• Registration involves a whole administrative process, with certain conditions needing to be met—including employing a qualified person or persons to oversee compliance with legislation, rules and regulations.
• Anyone issuing EFT credit payment instructions need to rein in their marketing, and cannot create any fraudulent, misleading or false impressions with consumers.

• They will also have to clearly indicate that they are contracted with a clearing system participant, publicly disclose terms and conditions in clear language, have procedures for handling complaints, and a privacy policy. They must also have a dispute resolution process and traceability, audit and record keeping processes.

• They must obtain informed consent, by making payers fully aware that they are issuing EFT instruction on behalf of the payer using their online banking credentials. Notably, it must be clearly communicated that by entering their login credentials, the payer is sharing the credentials with that person and is not logging on to their online banking website or application.

The new directive comes into effect 90 days from publications (around March 2025) and any contravention will be considered an offence in terms of the National Payment Systems Act.

The SARB said that failure to comply will result in the termination of anyone registered, and they will be required to cease issuing EFT instructions on behalf of any payers immediately.

The central bank said that any issuer who is not certain whether the directive applies to them should contact the SARB to clarify the matter (npsdirectives@resbank.co.za).

Businesstech

HEALTH AND SAFETY ARTICLES

SOUTH AFRICA

Maile warns South Africans who register businesses on behalf of illegal foreigners

 THERE will be dire consequences for South Africans who register businesses on behalf of undocumented foreigners, according to Gauteng Finance MEC Lebogang Maile.

This warning follows widespread social media claims that citizens could register spaza shops for foreigners in exchange for money

It has also been reported that South Africans often allow undocumented foreigners to use their properties for business purposes.

Maile addressed the media during a briefing yesterday to unveil the provincial government’s plan to support spaza shop owners in Johannesburg.

This initiative comes after recent clashes in Soweto, where community members and Operation Dudula protested against the registration of businesses for foreign nationals, leading to chaos at the Jabulani Civic Centre.

During these disturbances, residents expressed their anger, demanding that what they termed “illegal foreigners” leave the area.

Armed with placards, protesters disrupted services at the civic centre. Last week, President Cyril Ramaphosa issued a directive requiring all spaza shops and food-handling facilities to register their businesses within 21 days.

He emphasised that unregistered shops would be closed within 21 days if they failed to meet health standards. This initiative aims to address recurring food-borne illnesses that have claimed the lives of at least 22 children across the country in recent months.

South Africans have urged the government to intervene, blaming it for not regulating local businesses, which they believe has contributed to these tragedies.

Maile stated: “They are putting themselves at risk because if there is an accident, you will be held accountable.”

He assured the public that municipalities and the provincial government would deploy building inspectors and environmental health officers to oversee the registration process.

Although Maile acknowledged the limited capacity of these departments, he expressed a commitment to being present throughout the province to ensure that registrations are legitimate.

“We will visit every part of our province … whether we will be able to get into every door of spaza shop but we will be everywhere like a holy spirit,” he said.

He also called for increased police visibility at registration sites due to allegations of foreign nationals operating unregistered spaza shops.

“Foreign nationals will be required to provide valid documentation from the Department of Home Affairs authorising them to operate a business in South Africa. This must be in the form of a valid business visa or work permit,” Maile explained.

He outlined stringent requirements for spaza shop owners seeking registration, including submitting a properly filled-in application form with personal and business details, a certified copy of a South African identity document, proof of residence, and business registration with the Companies and Intellectual Property Commission (CIPC).

Moreover, foreign nationals must provide valid documentation from the Department of Home Affairs, complicating the already tense atmosphere in Soweto.

Maile reiterated that foreign nationals intending to apply for a business visa must demonstrate a significant financial commitment.

“The eligibility for a business visa, as per South African law, is that a foreign national must invest a prescribed amount of R5 million into an existing business or provide a business plan with evidence of that capital contribution,” he stated.

The government’s position was echoed by Stella Ndabeni-Abrahams, Minister of Small Business Development, who highlighted the responsibilities of landlords leasing properties to undocumented immigrants.

“Landlords should take the blame for leasing out their properties to undocumented and illegal immigrants. Even manufacturers are going to be checked as to who they have sold to, as they are putting people’s lives at risk,” she said.

In response to concerns raised by business owners about the 21-day deadline being insufficient, Maile encouraged them to begin applying for registration.

He stated that the 21-day period was set by Ramaphosa and could not be altered.

Registration points will be established at various municipalities, including the City of Tshwane, Mogale City Local Municipality, Rand West Local Municipality, City of Ekurhuleni, Emfuleni Local Municipality, Lesedi Local Municipality, and the City of Johannesburg Metro.

Kamogelo Moichela And Siyabonga Sithole

The Star Early Edition

PETROLEUM ARTICLES

The New Upstream Petroleum Resources Development Act from an Environmental Perspective

On 25 October 2024, President Ramaphosa assented to the Upstream Resources Development Bill (now the Upstream Petroleum Resources Development Act 23 of 2024) (the Act). The Act delineates the oversight of petroleum resources in South Africa, including the regulation of exploration and production of oil and gas. At face value, the Act seems propitious as it seeks to accelerate oil and gas exploration and production, which should in turn bolster the South African economy. The Act promotes the involvement of black persons in the industry and provides for government to have a 20% carried interest in oil and gas exploration and production. The Act also introduces a new petroleum right, which will allow exploration and production to be undertaken under a single license, as well as the concept of “competitive administrative licensing rounds” which are aimed at increasing competition in this sector, thereby boosting industry development.

The Need for a Tailored Approach

However, in the absence of a comprehensive legal framework which deals with the specific impacts of these activities, the acceleration of petroleum exploration and production could have severe ramifications for the environment. At present, petroleum exploration and production are mentioned under the Listing Notices to the Environmental Impact Assessment Regulations, 2014 and are indirectly regulated under other Specific Environmental Management Acts. However, a more tailored approach to petroleum exploration and production is arguably required, with offshore and onshore activities ideally dealt with separately and distinctly. This would ensure that the applicable legal framework properly accounts for and addresses the nuances of these activities and their impacts, in particular their environmental impacts.

Environmental Impacts

Firstly, offshore exploration and production often take place over a larger surface area than onshore activities, and the effects of offshore activities are likely to impact a larger surface area. An onshore oil spill, for example, will likely have a relatively limited impact depending on the source-pathway-receptors in the area of the spill. Conversely, offshore oil spills are likely to impact a larger area since oil is able to spread rapidly in the ocean and may even cause transboundary harm. The impacts of onshore exploration and production, with the possible exception of fracking, are also relatively well-known from a scientific standpoint. The impacts of offshore activities, however, are far less known as the technology used for offshore exploration and production has developed significantly in the past few decades. It is unclear how offshore exploration and production can be accelerated despite these scientific uncertainties, particularly bearing in mind that section 2 of the National Environmental Management Act (107 of 1998) requires that a precautionary approach is taken where such uncertainties exist.

Public Participation

Secondly, the nature of public participation for onshore and offshore exploration and production is different. There are no direct landowners or lawful occupiers which are impacted by offshore activities but there are entire communities, towns and regions with an interest in these activities and who may nevertheless be affected by oil and gas projects. The Act does not address the facilitation of public participation with broader groups of interested and affected parties, and how to notify these groups of proposed offshore exploration and production activities. The Act does make provision for regulations to be made which deal with consultation with interested and affected parties, however this issue will remain at least until these regulations are in force.

Compliance and Enforcement

Lastly, the approach to compliance and enforcement will also be inherently different for offshore and onshore projects. Offshore site inspections are more complex due to the accessibility, or rather inaccessibility, of rigs operating out at sea. Additionally, there are no neighbours or landowners in close proximity to these activities who might report potential non-compliances when inspectors are not present on site. This begs the question as to whether the Department of Minerals and Energy and the Petroleum Agency South Africa (PASA) have the capacity and capability to ensure that offshore projects will comply with the Act and other applicable environmental legislation.

Environmental Authorisations and the Role of PASA

The Act retains PASA as the competent authority for the issuing of environmental authorisations for oil and gas projects. PASA’s mandate includes, inter alia, the promotion of the development of petroleum input industries. PASA also has a significant role to play in Operation Phakisa which is specifically aimed at achieving the rapid development of South Africa’s oil and gas sector. It is unclear how PASA is able to reconcile these objectives with the need to protect the environment

Achieving Its Objectives

The Act seems promising but may be cause for concern from an environmental perspective. The main obstacles to the acceleration of oil and gas projects in the country at the moment seem to be the internal appeals and review applications launched against these projects, such as Sustaining the Wild Coast and Others v the Minister of Mineral Resources and Energy and Others and the recently instituted Green Connection NPC and Another v the Minister of Forestry, Fisheries and the Environment and Others. The arguments raised in these matters are largely premised on environmental concerns such as climate change impacts and scientific uncertainty. It is difficult to envisage how the Act will succeed in accelerating oil and gas development if these projects continue to be held up by litigious processes, which will likely be the case until these concerns are properly addressed by the Legislature.

Written by Mikaella Bodeux

Warburton Attorneys Inc.

PROPERTY ARTICLES

SOUTH AFRICA

Top court rules for Glencore in dispute with municipalities

The Constitutional Court has ruled in favour of Swiss-based commodities trader Glencore in its dispute with two Mpumalanga municipalities, finding that local councils lacked the legislative authority to create bylaws creating transfer embargoes on property.

The judgment goes a long way in giving certainty to property developers on the powers granted to councils in regulating the transfer of properties.

In a majority ruling, the apex court found that by-laws enacted by the Govan Mbeki and eMalahleni municipalities, which impose an embargo on the registration of transfer of immovable property until the municipalities certify that their requirements have been met, are not within the purview of local government.

The majority judgment, written by acting justice Matthew Chaskalson, said that since there was no constitutional or legislative source for the power of the municipalities to make bylaws imposing transfer embargoes as enforcement mechanisms for their town planning schemes and building approval matters, the bylaws challenged by Glencore were inconsistent with the constitution, making them unlawful and invalid. “The superficial attraction of the municipalities’ argument that a transfer embargo should be seen as falling within the original bylaw-making power conferred by the constitution flows from the fact that the municipal planning function and the national deeds registration functions are capable of being confused with one another.

“The constitution, however, treats the national deeds registration function separately from the municipal planning function,”

BYLAWS GLENCORE CHALLENGED WERE INCONSISTENT WITH THE CONSTITUTION, MAKING THEM UNLAWFUL AND INVALID

said the majority judgment, with three justices dissenting.

“Once these two functions are separated, there is no basis to treat a bylaw dealing with the national function as falling within the competence to make bylaws for the effective administration of the municipal competence, simply because it is used to enforce matters relating to that municipal competence.”

Four justices of the apex court concurred with Chaskalson’s interpretation of the law, giving them a majority.

The dispute between Glencore and the municipalities in the coal-rich Mpumalanga province arose when the two municipalities promulgated bylaws obliging a transferor of land to first obtain a certificate from the municipality confirming, among other things, that all funds due by the transferor regarding the land had been paid, and that the land use and buildings constructed on the land complied with the requirements of their respective land use schemes.

Without this certificate, the transferor could not approach the registrar of deeds for the transfer of the property.

The municipalities then blocked the transfer of 55 multimillion-rand properties between Glencore and other entities after they failed to comply.

The Constitutional Court’s judgment confirms the groundbreaking 2022 judgment of the Supreme Court of Appeal, which held that some of the bylaws enforced in terms of the Spatial Planning and Land Use Management Act were invalid.

Those bylaws contained provisions that authorised local authorities to issue certificates of compliance with spatial planning regulations, and require attorneys to obtain certificates of compliance before registering the transfer of properties.

Judgement

Kabelo Khumalo

Business Day

PUBLIC SECTOR ARTICLES

Treasury looks at regulations for the use of consultants

THE National Treasury has developed a regulatory framework for the use of consultants by state organs that require accounting officers to develop a reasonable remuneration framework to determine the fee structure for consultants.

This as R1.3 billion has been spent by the local government sphere on the use of consultants to compile financial statements. The use of consultants by local government has been criticised by the Auditor-General over the past few years.

Responding to parliamentary questions from ActionSA MP Alan Beesley, Finance Minister Enoch Godongwana said there was a regulatory framework for consultants, which was contained in the Municipal Cost Containment Regulations, that was promulgated in 2019.

“Regulation 5 requires municipalities to appoint consultants only after conducting a needs assessment which confirms that the affected municipality or municipal entity does not have the requisite skills or resources in its full-time employ to perform the function.

“These regulations further require municipalities to implement consultancy reduction plans,” Godongwana said.

He was responding to Beesley who had asked whether the minister intended reducing the R1.3 bn spent by municipalities on consultants before establishing stricter guidelines on consultant fees, enhancing transparency in procurement, increasing the capacity-building for municipal staff and conducting audits to assess the necessity of consultant engagements.

In August, Auditor-General Tsakani Maluleke found that there was on-going reliance on the use of consultants to compile financial statements.

In her consolidated report on audit outcomes of local government for 2022-2023, Maluleke said the amount recorded in 2022-23 was reduced to R1.35 billion compared to the R1.63bn spent in the previous financial year.

In his response, Godongwana said the regulation on the use of consultants required accounting officers to develop a reasonable remuneration framework to determine the fee structure for consultants, considering the rates that have been determined by different bodies.

He also said the Municipal Finance Management Act (MFMA), read together with regulation of the Municipal Supply Chain Management Regulations, outlined processes which must be followed with respect to appointing consultants.

“These processes are aligned to the public sector procurement principles in section 217 of the Constitution which is inclusive of the principle of transparency. These provisions must be read together with Regulation 5 of the Municipal Cost Containment Regulations which further outlines additional terms and conditions for the appointment of consultants.”

Godongwana also said the National Treasury has been supporting municipalities through the financial management grant, which has been used by municipalities to capacitate their officials by undertaking the relevant training.

The training sought to ensure that officials were competent to perform their financial management and supply chain management related responsibilities, as outlined in the MFMA and the municipal regulations on minimum competency levels.

“Over and above the support provided through the Financial Management Grant, the National Treasury has undertaken several capacity building initiatives aimed at supporting and building capacity within municipalities, which includes the Municipal Finance Improvement Programme where technical advisors are deployed in municipalities to provide support on a number of disciplines such as asset management, accounting, budgeting and others.

“The National Treasury also undertakes numerous capacity building workshops for municipal officials including on the generally recognised accounting practices (GRAP) standards.”

The minister added that the Auditor-General of South Africa undertakes audits on the use of consultants.

Mayibongwe Maqhina

The Mercury