The South African Reserve Bank has published the Prudential Authority’s 2025/26 annual report, which says the prudential framework was strengthened through completion of the remaining Basel III post-crisis reforms and South Africa’s removal from the Financial Action Task Force greylist. The report describes the financial system as stable overall, with banks remaining well capitalised and liquid, insurers broadly robust and market infrastructures functioning effectively, although smaller deposit-taking institutions and some insurers continue to face business model, governance and control weaknesses. The report’s main regulatory and supervisory developments include implementation of the remaining Basel III reforms from 1 July 2025, amendments covering market risk, credit valuation adjustment, interest rate risk in the banking book and resolution-related standards, and continued work on governance expectations for boards and senior management. It also highlights rising focus on third-party risk, cyber resilience, data governance, cloud outsourcing and artificial intelligence. A joint survey on AI across the financial sector found governance, skills and regulatory alignment gaps and will inform a consultation paper. On enforcement and AML/CFT supervision, the Prudential Authority considered 166 referrals for non-compliance, carried out 22 AML/CFT and counter-proliferation financing inspections, and identified ongoing weaknesses in customer due diligence, controls, governance and reporting at some banks and life insurers. Next steps set out in the report include preparations for South Africa’s next FATF mutual evaluation, publication of a consultation paper on AI risks, opportunities and governance, and continued preparations for the Prudential Authority to assume prudential regulation and supervision of retirement funds, collective investment schemes and friendly societies from 1 April 2028.
South African Reserve Bank2026-06-29
South African Reserve Bank publishes Prudential Authority annual report highlighting Basel III completion and South Africa's FATF greylist exit
The South African Reserve Bank’s Prudential Authority annual report says South Africa’s prudential framework was strengthened by completion of the remaining Basel III reforms and the country’s exit from the FATF greylist. The report says the financial system remains stable overall, but flags governance, third-party, cyber, data and AML/CFT weaknesses at some institutions, especially smaller deposit-taking firms. It also points to a forthcoming AI consultation and continued preparation for the Prudential Authority’s expanded supervisory mandate from 1 April 2028.