A significant regulatory development is taking shape in South Africa’s financial sector, with potentially important implications for a wide range of regulated financial institutions.
The Financial Sector Conduct Authority (FSCA) and Prudential Authority (PA) have published Joint Notice 1 of 2026, which introduces a Draft Joint Standard setting out proposed requirements relating to the beneficial owners of financial institutions.
While beneficial ownership is already a familiar concept in the context of anti-money laundering and financial crime compliance, the proposed standard takes the issue in a particularly important direction. It is not primarily concerned with identifying the beneficial owners of customers or clients. Instead, the focus is on the individuals who ultimately own, control or exercise material influence over the financial institution itself.
This distinction is important because it places beneficial ownership firmly within the regulatory governance and oversight framework applicable to financial institutions.
Under the proposals, beneficial owners of regulated financial institutions would be required to satisfy prescribed honesty and integrity requirements. In practical terms, regulators would therefore be concerned not only with establishing who ultimately owns or controls an institution, but also with whether those individuals are suitable to exercise that ownership or influence.
Financial institutions would also be expected to establish processes for identifying, verifying and recording their beneficial owners. This would not be a once-off compliance exercise. The draft contemplates ongoing, risk-based reviews and re-screening of beneficial owners, with reviews taking place at least every two years.
Another significant proposal is the requirement for institutions to establish and maintain a beneficial ownership repository. Information contained in this repository would need to be submitted to the relevant regulators annually, creating a more structured and continuous regulatory reporting framework around ownership and control.
Institutions would also have an obligation to notify regulators when changes in beneficial ownership occur. This could make ownership restructures, new investments and changes in control more significant from a regulatory compliance perspective, particularly where transactions involve multiple entities or complex ownership arrangements.
The proposed thresholds are also important. The draft refers to a threshold of 5% for direct ownership and 15% for effective control. These thresholds could bring a relatively broad group of individuals within the beneficial ownership framework, depending on how ownership, voting rights and control are structured.
The proposed requirements could be particularly relevant to financial services providers (FSPs), insurers, banks, investment managers and other regulated institutions with more complex ownership arrangements. Companies involving trusts, offshore shareholders, private equity investors, holding companies or layered corporate structures may need to pay particular attention to how ultimate ownership and effective control are identified and documented.
For these institutions, determining beneficial ownership may not always be straightforward. Legal ownership can differ from effective control, while influence may be exercised through voting arrangements, trusts, shareholder agreements or other mechanisms. Institutions may therefore need to look beyond their immediate shareholder registers when assessing who ultimately exercises ownership or control.
The Draft Joint Standard is not yet final law, and its requirements may change following the consultation process. Nevertheless, it provides a clear indication of the regulatory direction being taken by South Africa’s financial authorities.
Beneficial ownership is increasingly moving beyond being a record-keeping or anti-money laundering consideration. It is becoming an issue of governance, fitness and propriety, transparency and ongoing regulatory supervision.
Financial institutions should therefore consider assessing their existing ownership structures and beneficial ownership information against the proposed requirements. Early consideration may help identify information gaps, complex control arrangements and areas where governance or reporting processes may need to be strengthened.
Interested parties had until 25 September 2026 to submit comments on the Draft Joint Standard.