South Africa’s financial regulatory architecture is undergoing its most consequential legislative overhaul in a generation. Within a single parliamentary cycle, two bills carrying systemic weight have been formally set in motion: the Conduct of Financial Institutions (COFI) Bill, for which the Minister of Finance gave formal notice of introduction to the National Assembly on 17 April 2026, and the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill 2026, cleared by Cabinet on 1 April and now queued for parliamentary tabling. Both bills arrive as South Africa’s next Financial Action Task Force Mutual Evaluation is scheduled to commence in mid-2026, with a final report due in October 2027.
The timing is not coincidental. National Treasury confirmed that the next Mutual Evaluation will form the basis of the FATF’s assessment of South Africa’s AML and CFT measurable outcomes, including successful investigations, prosecutions, and sanctions. For banks, insurers, asset managers, fintechs, and non-bank financial institutions, the legislative window now open is the last realistic opportunity to restructure compliance frameworks before international assessors arrive.
What the COFI Bill Changes — and Who It Affects
The COFI Bill is designed to create a single, holistic framework for regulating the market conduct of financial institutions across the sector, replacing the fragmented position in which different rules and standards are spread across multiple industry-specific laws. Its scope is broad: it will apply to banks, short-term and long-term insurers, collective investment schemes, retirement funds, credit rating services, and financial technology firms, among others.
Among the most consequential changes is the expansion of what constitutes a financial product or financial service to include arrangements that are similar in nature or produce similar outcomes to traditional financial products, regardless of the technology used. This single clause has material implications for the growing layer of embedded finance, BNPL platforms, and digital wallet operators currently operating in regulatory grey zones.
For customers, the most immediate significance is the Bill’s emphasis on fair treatment. Cabinet stated that COFI is aimed at ensuring fair customer treatment, promoting stability and supporting a safer financial sector that operates in the interests of consumers. The Bill also expressly requires financial institutions to maintain transformation policies aligned with the Financial Sector Code, drawing BEE compliance obligations directly into the conduct regulatory framework for the first time.
Critically, COFI introduces activity-based licensing. Institutions will no longer be assessed purely by product type but by the nature of the activity they perform, a shift that closes the arbitrage opportunities that have allowed some market participants to avoid FSCA oversight. Once enacted, a three-year transitional period is expected to follow promulgation.
The AML/CFT Amendment Bill: Expanded Powers, Lifestyle Audits, and Beneficial Ownership
The General Laws Amendment Bill 2026 moves on a parallel but equally consequential track. The 2026 draft Bill builds on earlier versions and proposes amendments to five pieces of legislation: the Financial Intelligence Centre Act 2001, the Nonprofit Organisation Act 1997, the Trust Property Control Act 1988, the Companies Act 2008, and the Financial Sector Regulation Act 2017.
The most discussed provision is the introduction of formal lifestyle audit powers for the Financial Intelligence Centre. The Bill introduces measures requiring greater clarity around who ultimately owns and controls legal entities in South Africa, making it harder for criminals to conceal their interests and reducing opportunities for abuse. The FIC’s capacity to initiate lifestyle audits, cross-referencing declared income against visible assets and expenditure, represents a material escalation in South Africa’s financial crime detection toolkit.
The Amendment Bill also proposes sweeping changes to the FIC Act, the Companies Act, and the Financial Sector Regulation Act, with expanded information-sharing powers and strengthened enforcement mechanisms targeting non-compliance with beneficial ownership obligations.
For non-profit organisations, the implications are direct. The Bill grants the NPO Directorate expanded monitoring and enforcement powers, closing a longstanding vulnerability that the FATF had flagged as a channel for illicit financial flows.
What This Means for Capital and Cross-Border Business
South Africa’s removal from the FATF grey list in October 2025 materially reduced friction in cross-border banking relationships. The compliance infrastructure businesses built during the grey listing period should be maintained and matured, not wound back, grey listing created a kind of compliance arms race in South Africa’s fintech sector, and those capabilities are now a competitive asset.
The COFI and AML/CFT bills together signal that South Africa’s post-grey list posture is one of continued intensification, not regulatory relief. Foreign counterparty banks and international investors conducting due diligence on South African financial institutions will now factor in an impending regulatory overhaul that touches governance, conduct, beneficial ownership, and technology-enabled financial services simultaneously.
The next FATF Mutual Evaluation will assess how well South Africa’s reforms are working in practice, with regulators expected to continue strengthening enforcement, due diligence, and reporting frameworks to perform well in that evaluation.
Institutions with cross-border operations, particularly in banking, insurance, asset management, and fintech, should treat the current parliamentary process as a compliance planning trigger, not a monitoring exercise. The bills are in motion. The evaluation window is already open.
