MEMORANDUM OF UNDERSTANDING

between

The South African Reserve Bank

and

The Financial Sector Conduct Authority

Jointly hereinafter referred to as the “Parties”

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Contents

1. Introduction ................................................................................................................. 3
2. Purpose ...................................................................................................................... 3
3. Interpretation and Definitions ................................................................................... 4
4. Roles and Responsibilities ......................................................................................... 6
5. Co-operation and collaboration ................................................................................ 7
6. Minimising the duplication of effort and expense ..................................................... 7
7. Specific areas of co-operation and collaboration ..................................................... 8
8. Resolution of conflicts .............................................................................................. 10
9. Limitation .................................................................................................................. 11
10. Review and Amendment ......................................................................................... 11
11. Publication of the Memorandum of Understanding ................................................ 11
12. Commencement ....................................................................................................... 11
    ANNEXURE A: FSCA and NPSD
    ANNEXURE B: FSCA and FinStab

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1. Introduction

1.1

Section 26, 27, 76 and 77 of the Financial Sector Regulation Act, 2017 (Act No.9 of 2017) (FSR Act) requires the Financial Sector Conduct Authority (FSCA) and the South African Reserve Bank (SARB) to cooperate and collaborate with one another when performing their functions in terms of financial sector laws and on matters relating to financial stability. The SARB and the FSCA must enter into one or more Memoranda of Understanding (MoU) to give effect to such co-operation and collaboration.

1.2

This MoU is entered into between the Parties as so required.

1.3

This MoU acknowledges that the Currency and Exchanges Act, 1933 (Act No. 9 of 1933) (Currency Act) and the National Payment System Act, 1998 (Act No. 78 of 1998) (NPS Act) are not financial sector laws under the FSR Act. The Parties nevertheless agree that this MoU will also apply to co-operation and collaboration between them when performing their respective functions under the Currency Act, the NPS Act and financial sector laws in relation to payment services and services related to the buying and selling of foreign exchange.

2. Purpose

2.1.

This MoU is intended to:

2.1.1.

strengthen and formalise a relationship of trust, good faith, mutual co-operation, support, assistance, information sharing, and appropriate co-ordination of actions in terms of relevant financial sector laws, The Currency Act and the NPS Act between the Parties, on matters relating to financial stability, payment services and services related to the buying and selling of foreign exchange;

2.1.2.

enable the Parties to reach a common understanding on areas where their respective regulatory and supervisory objectives and responsibilities may overlap.

2.2.

This MoU includes separate co-operation and collaboration arrangements, addressing the regulatory, supervisory and enforcement responsibilities of the Parties in terms of the FSR Act, the NPS Act, the Currency Act and relevant financial sector laws as set out in this MoU and in the Annexures as listed below:

2.2.1.

Arrangements between the NPSD and the FSCA in relation to payment services - Annexure A.

2.2.2.

Arrangements between the FinStab and the FSCA in relation to financial stability matters - Annexure B.

3. Interpretation and Definitions

3.1.

Words and/or expressions used in this MoU and the annexures thereto that are defined in the FSR Act shall have the same meaning as in the FSR Act, unless the context indicates otherwise.

3.2.

The singular includes the plural and vice versa.

3.3.

Any gender includes the other genders.

3.4.

A person includes a legal or a natural person.

3.5.

Definitions-In this MoU and in the annexures thereto, unless the context indicates or requires otherwise:

3.5.1.

FinStab means the Financial Stability Department of the South African Reserve Bank;

3.5.2.

FinSurv means the Financial Surveillance Department of the South African Reserve Bank, authorised to regulate Exchange Control Regulations, issued in terms of section 9 of the Currency Act;

3.5.3.

FSCA means the Financial Sector Conduct Authority established in terms of Section 56 of the FSR Act;

3.5.4.

FSR Act means the Financial Sector Regulation Act 9 of 2017 (No.9 of 2017);

3.5.5.

NPSD means the National Payment System Department of the South African Reserve Bank, authorised to perform the functions in respect of the powers and duties contemplated in section 10(1)(c) of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989) and the NPS Act;

3.5.6.

Payment Systems Financial Market Infrastructure (payment system FMI) means a multilateral system among participating institutions, including the operator of the system, that is used for the purposes of clearing, settling or recording payments, and includes the following:

3.5.6.1.

A large-value payment system known as the South African Multiple Option Settlement (SAMOS) system, which is a real-time gross settlement (RTGS) system owned and operated by the SARB (including the participants, instruments, procedures, and rules);

3.5.6.2.

A retail payment system, which clears retail transactions, owned and operated by BankservAfrica (including the participants, instruments, procedures, and rules);

3.5.6.3.

A retail payment system, which clears retail transactions, owned and operated by VISA (including the participants, instruments, procedures, and rules);

3.5.6.4.

A retail payment system, which clears retail transactions, owned and operated by MasterCard Southern Africa (including the participants, instruments, procedures, and rules);

3.5.6.5.

A large-value payment system which clears the delivery and payment legs of equities, bonds, and money-market transactions, owned and operated by Strate (including the participants, instruments, procedures, and rules). The SARB is only responsible for the regulation and oversight of the clearing of the payment leg, while the FSCA and Prudential Authority are responsible for the regulation, supervision and oversight of the clearing of the delivery leg;

3.5.6.6.

A large-value payment system, known as Continuous Linked Settlement (CLS) system, which settles foreign-exchange transactions in designated currencies, including the South African rand, owned and operated by the CLS Bank International (including the participants, instruments, procedures, and rules); and

3.5.6.7.

A large-value payment system, known as the Southern African Development Community (SADC) Real Time Gross Settlement System (SADC-RTGS), which settles cross-border transfers that require immediate settlement within SADC, owned by SADC central banks and operated by the SARB (including the participants, instruments, procedures, and rules).

3.5.7.

Authority means the Prudential Authority, a juristic person within the administration of the SARB, established in terms of section 32 of the FSR Act;

3.5.8.

Regulatory instruments for the purposes of this MoU include directives issued in terms of the NPS Act, information papers, position papers, guidance notes, interpretation notes and notices issued by the NPSD;

3.5.9.

SARB means the South African Reserve Bank as referred to in section 223 of the Constitution of the Republic of South Africa and established in terms of the South African Reserve Bank Act, 1989 (Act No. 90 of 1989), and includes FinStab, NPSD, FinSurv and any other department thereof.

3.6.

The annexures to this MoU form an integral part hereof and words and expressions defined in this MoU shall bear, unless the context otherwise requires, the same meaning in such Annexures.

4. Roles and Responsibilities

4.1.

The Parties acknowledge their respective roles as specified in the financial sector laws, The Currency Act and the NPS Act.

4.2.

The Parties agree to execute and fulfil their concomitant legislative roles and responsibilities with utmost good faith and trust.

4.3.

The Parties further agree to take reasonable steps to endeavour to secure and maintain sufficient and appropriate resources in order to meet their concomitant roles and responsibilities in terms of this MoU and all the relevant legislation and will together explore appropriate funding resources in respect of joint projects.

5. Co-operation and collaboration

5.1.

The Parties acknowledge their mutual responsibilities to effectively and efficiently co-operate, collaborate, assist each other and exchange information, in the fulfilment of their concomitant legislative responsibilities and obligations as prescribed by the financial sector laws, the NPS Act and the Currency Act, and endeavour to take the necessary steps to achieve such.

5.2.

The Parties will proactively identify types of information which, if shared, would enhance appropriate co-operation and collaboration between them, including but not limited to information obtained or in the possession of one Party that would be likely to assist the other Party in administering, supervising or enforcing of financial sector laws, The Currency Act and the NPS Act, in furtherance of their respective mandates.

5.3.

The Parties will endeavor to take steps to ensure effective communication of information identified in terms of 5.2, including by holding regular meetings, maintaining on-going operational relationships and communicating on an ad hoc basis where necessary. Any means of communication will be acceptable, but should preferably be in writing, or subsequent to communication be reduced to writing and may be transmitted by electronic means.

5.4.

The Parties agree to share and exchange the relevant information required in terms of this MoU as prescribed in section 251 of the FSR Act to the extent that it may be applicable.

5.5.

The details and format of the information required in terms of this section may be agreed in protocols between the SARB and the FSCA.

6. Minimising the duplication of effort and expense

6.1.

The Parties, through the mechanisms outlined in this MoU and in general, will make every effort to minimise the duplication of effort and expense in the performance of their functions, both as between the Parties and also in relation to any obligations they respectively impose on financial institutions.

7. Specific areas of co-operation and collaboration

7.1.

Without limiting the generality of this MoU, the Parties agree that the FSCA and NPSD will specifically co-operate and collaborate on the following matters, in the manner as set out in Annexure A:

7.1.1.

Annexure A1: Consistent policy positions and regulatory strategies and international representation;

7.1.2.

Annexure A2: Regulatory instruments;

7.1.3.

Annexure A3: Licensing of payment service providers;

7.1.4.

Annexure A4: Supervisory onsite inspections and investigations;

7.1.5.

Annexure A5: Enforcement and administrative action;

7.1.6.

Annexure A6: Anti-money laundering (AML) and combating the financing of terrorism (CFT).

7.2.

Without limiting the generality of this MoU, the Parties agree that the FSCA and FinStab will specifically co-operate and collaborate on the following matters, in the manner as set out in Annexure B:

7.2.1.

Statutory co-operation in relation to the SARB’s financial stability responsibilities;

7.2.2.

Monitoring of financial stability risks;

7.2.3.

Designation of systemically important financial institutions (SIFIs);

7.2.4.

Resolution, winding up and/or similar steps in respect of SIFIs;

7.2.5.

Actions that require concurrence;

7.2.6.

Information exchange;

7.2.7.

General matters.