Proposed New Rules On Beneficial Ownership For Financial Institutions

South Africa's financial regulators have taken another significant step in the fight against financial crime. On 14 August 2026, the Prudential Authority (“PA”) and the Financial Sector Conduct Authority (“FSCA”) (collectively, the “Authorities”) published the Draft Joint Standard 1 of 2026 – Requirements pertaining to beneficial owners for public comment.

The draft Joint Standard has its roots in South Africa’s greylisting by the Financial Action Task Force (“FATF”) in 2023. The FATF’s review found that fit-and-proper checks in the financial sector often did not cover beneficial owners – the natural persons who ultimately own or control a financial institution. This gap meant there were insufficient safeguards to prevent criminals or their associates from holding, or being beneficial owners of, significant or controlling interests in, or holding a management function in financial institutions.

In response, the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 (“GLAA”) was enacted, inserting Chapter 11A into the Financial Sector Regulation Act, 2017 (“FSRA”). Chapter 11A introduced a statutory definition of "beneficial owner" and empowered the Authorities to prescribe standards relating to beneficial ownership. The draft Joint Standard is the first exercise of that power.

Who does the Draft Joint Standard apply to?

The Draft Joint Standard applies to "financial institutions" as defined in the FSRA - but only those that are also accountable institutions under the Financial Intelligence Centre Act, 2001 (“FIC Act”).

In practice, this captures a wide range of regulated entities, including banks, mutual banks, life insurers, collective investment scheme managers, financial services providers authorised under FAIS (in respect of investment products), authorised users of exchanges, money or value transfer providers, and clearing system participants. Notably, co-operative financial institutions under the Co-operative Banks Act are expressly included - reflecting their bank-like risk profile and deficiencies flagged in the MER.

In relation to the ownership of the financial institutions, the standard applies to the beneficial owners of those financial institutions - that is, the natural persons who ultimately own or control them, as defined in section 159A(1) of the FSRA.

Importantly, certain categories of persons are expressly excluded from the definition of "beneficial owner". These are natural persons who acquired their ownership interest through:

1. listed securities (as defined in the Financial Markets Act);
2. membership of a pension fund (as defined in the Pension Funds Act);
3. participation in a collective investment scheme (as defined in the Collective Investment Schemes Control Act); or
4. an employee share scheme (as defined in the Companies Act). Financial institutions that are not accountable institutions under the FIC Act also fall outside the standard's scope.

What are the key requirements for financial institutions?

The Draft Joint Standard seeks to ensure that the natural persons who ultimately own or control financial institutions are transparent, honest and fit to occupy that position. Its key pillars include:

1. Fit-and-proper requirements: Beneficial owners must demonstrate honesty and integrity. The standard sets out an extensive list of factors that constitute prima facie evidence of a lack of honesty and integrity - ranging from criminal convictions for financial crime, to breaches of fiduciary duty, to removal from an office of trust.
2. Governance obligations: Institutions must establish governance policies, processes and procedures for managing risks relating to their beneficial owners and for ensuring compliance with the standard.
3. Identification, verification and ongoing monitoring: Financial institutions must take all reasonable steps to identify, obtain relevant information regarding and verify their beneficial owners. Re-screening must occur at least every two years, adopting a risk-based approach.
4. Reporting and notification duties: Institutions must maintain an accurate repository of beneficial owner details, submit an annual register to the relevant Authority, and notify the Authorities within 30 calendar days of identifying a new or potential beneficial owner - or of a beneficial owner ceasing to hold that status.
5. Clarification of key concepts: The standard defines "ultimate ownership" (a natural person holding 5% or more ownership) and "effective control" (the ability to exercise or control 15% or more of voting rights, appoint or remove 15% of the governing body, or otherwise materially influence the institution's management, operations or key decisions). It is notable that this is a similar but different test to the “Significant Owner” test under Chapter 11 of the FSRA.

Interaction with existing beneficial ownership obligations

Financial institutions will recognise that they already face beneficial ownership obligations under other regulatory frameworks. Notably, the GLAA introduced broad requirements for companies and close corporations to identify and record their beneficial owners for submission to the Companies and Intellectual Property Commission ("CIPC"). Accountable institutions under the FIC Act also have longstanding customer due diligence obligations that include identifying beneficial owners of clients. Click here to read our prior article on beneficial ownership. 

The draft Joint Standard introduces a distinct, additional layer of regulation, but its focus is different from that of the GLAA’s beneficial ownership regime under the Companies Act. Unlike the Companies Act regime which requires companies to identify and record the beneficial owners of the company for submission to the CIPC, the draft Joint Standard focuses on the beneficial owners of financial institutions specifically, with a view to preventing criminals or their associates from holding, or being the beneficial owner of, significant or controlling interests in those institutions.

This focus reflects FATF Recommendation 26, which requires financial supervisors to take measures to prevent criminals from acquiring ownership or control of financial institutions - a deficiency highlighted in South Africa’s 2021 Mutual Evaluation Report.

Importantly, the draft Joint Standard also introduces a dual reporting obligation: financial institutions must submit an annual register of beneficial owner details to the relevant Authority, and must notify the Authorities within 30 calendar days of identifying a new or potential beneficial owner, or of a beneficial owner ceasing to hold that status.

The dual reporting obligation is worth noting. Financial institutions may find themselves subject to overlapping identification, verification, record-keeping and reporting obligations under the Companies Act, and, now, the FSRA. Managing these parallel regimes efficiently, and avoiding unnecessary duplication of effort, will be an important compliance exercise.

The comment process: key dates and how to participate

The Authorities are inviting written submissions on the draft Joint Standard. Comments must be submitted on or before 25 September 2026, using the template available on the FSCA and PA websites and emailed to: FSCA.RFDStandards@fsca.co.za and PA-Standards@resbank.co.za

Financial institutions are invited to provide both qualitative and quantitative input, particularly on the compliance costs of ongoing identification and verification. This is a meaningful opportunity for industry participants to shape the final form of the standard.

Looking ahead

Once finalised, the final Joint Standard will take effect within six months of publication. Financial institutions should use the consultation period to review their current beneficial ownership frameworks, identify gaps and prepare for compliance.

The authors of this article are part of the ENS Corporate Commercial Financial Sector Practice Group. Our Financial Sector Capability Statement is available here.