COREDO – EU Legal & Compliance Services Expert legal consulting, financial licensing (EMI, PSP, CASP under MiCA), and AML/CFT compliance across the European Union. Headquartered in Prague, we provide seamless regulatory solutions in Germany, Poland, Lithuania, and all 27 EU member states.
In South Africa, a financial services provider (FSP) license is issued not by the South African Reserve Bank (SARB) but by the Financial Sector Conduct Authority (FSCA). The legal basis is the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS).
Licensing in South Africa starts with one question: what activity are you planning? The answer decides the regulator: the FSCA, the SARB or the Prudential Authority (PA).
Why is it so difficult to obtain a financial service provider license in South Africa and how can you avoid the common mistakes that lead to rejections?
The FAIS Act tests people, not only documents. The applicant must show honesty and integrity, competence, operational ability and financial soundness. Many providers also carry anti-money laundering duties under the Financial Intelligence Centre Act 38 of 2001 (FIC).
A timely question: how to structure the process so as not only to obtain an FSP license in South Africa but also to ensure the long-term sustainability of the business?
In this article I, Nikita Veremeev, share the experience of COREDO, revealing the key licensing conditions, real cases and practical recommendations.
If you want to gain a strategic advantage and avoid pitfalls, I recommend reading to the end. You will find answers to the most pressing questions and learn how the COREDO team helps clients not only to obtain a license but also to build an effective business model in South Africa.
Licensing of payment systems in South Africa
South Africa's financial sector follows a "Twin Peaks" model. The Financial Sector Regulation Act 9 of 2017 (FSR) created two regulators: the Prudential Authority within the SARB and the FSCA as the market conduct regulator. So anyone planning to provide financial services in South Africa should first work out which regime applies.
Three regimes that are often confused. Advice and intermediary services in respect of financial products are licensed by the FSCA under the FAIS Act. The payment system is regulated by the SARB under the National Payment System Act 78 of 1998 (NPS). Banks and insurers are licensed by the Prudential Authority under the Banks Act 94 of 1990 and the Insurance Act 18 of 2017.
The SARB's powers over the payment system rest on section 10(1)(c) of the South African Reserve Bank Act 90 of 1989 (SARB Act) and on the NPS Act. According to the SARB, access to the system is through designation or authorisation under the NPS Act. The SARB's National Payment System Department (NPSD) regulates payment systems, their operators, third-party payment providers and e-money providers.
In 2026 the set-up changed. The SARB withdrew the recognition of the Payments Association of South Africa (PASA) as the payment system management body, and its functions passed to the SARB and PayInc effective 2 September 2026. Licensing, authorisation and registration of payment institutions now sit with the SARB. Existing authorisations remain valid unless the SARB decides otherwise.
The boundary between the regimes is official. A joint communication of the SARB and the FSCA of May 2026 states that activities defined in the NPS Act do not fall under the FAIS Act. And an FSCA license under the FAIS Act does not cover oversight of crypto assets used for payments within the meaning of the NPS Act.
So before filing, map your business model step by step: who the client is, what the product is, who receives and transfers the money. This analysis shows whether you need an FSCA license, a SARB authorisation or both.
Understanding these boundaries plays a decisive role in preparing to meet the requirements imposed on financial service providers in South Africa.
Requirements for financial service providers in South Africa
The FSCA says it plainly: people and entities must obtain authorisation (a license) from the FSCA before they provide financial services. The licensing approach is proportionate to business risk; there is no one-size-fits-all template. Below we will consider the key aspects that a provider must meet when entering the South African market.
Under section 7(1) of the FAIS Act, a person may not act or offer to act as a financial services provider without a license issued under section 8. Under section 1, a provider is a person who, as a regular feature of its business, furnishes advice or renders intermediary services.
Financial products under section 1 of the FAIS Act include securities, participatory interests in collective investment schemes, insurance contracts, pension fund benefits and bank deposits. Since 19 October 2022 they also include crypto assets.
Financial stability and types of capital
Section 8(1)(c) of the FAIS Act requires the applicant to prove its financial soundness. The details are set by chapter 6 of the FSCA fit and proper requirements (Board Notice 194 of 2017), and the information is filed on form FSP8. Do not borrow a capital figure from someone else's project: the requirements depend on the license category and the type of activity. It is important not only to show the availability of funds but also to justify their origin: this is a key element in the fight against money laundering.
Reserves and solvency indicators must be confirmed by audited reports. In one of COREDO's cases the client had to additionally disclose funding sources to convince the regulator of the absence of informal transfer risks and compliance with FATF standards.
Qualifications and experience of managers
Under section 8(1) of the FAIS Act, the applicant must show honesty and integrity, competence and operational ability, as well as financial soundness. Where the applicant is a company or a trust, honesty and competence are also tested for each key individual. A key individual is a person who manages or oversees the activities relating to financial services.
The requirements of Board Notice 194 of 2017 apply to providers, key individuals and representatives. They cover honesty, integrity and good standing (chapter 2) and competence: experience, qualifications, regulatory examinations and product training (chapter 3). Then come continuous professional development (chapter 4), operational ability (chapter 5) and financial soundness (chapter 6).
In one of the recent projects the COREDO team helped a client strengthen the board of directors by inviting an independent expert with experience in international payment systems. This decision became a critical factor for successfully passing the review at the Due Diligence stage.
Internal company policies and procedures
A representative is a person who renders financial services on behalf of a provider. Under section 13 of the FAIS Act, the provider keeps a register of its representatives and their key individuals and updates it regularly. A provider with more than one key individual or with representatives appoints a compliance officer (section 17(1)), and the regulator approves that officer (section 17(2)).
Implementing an internal control system and regular audits is not a formality but a mandatory condition. The provider keeps accounting records and annual financial statements, which an external auditor audits (section 19). The solutions developed at COREDO allow clients not only to meet the regulator's requirements but also to build an effective transaction monitoring system, which is especially relevant for companies working with digital financial services.
How do I obtain a financial services provider license in South Africa?
The process of obtaining a license as a financial services provider in South Africa runs through the FSCA's electronic system (FAIS e-Licensing System). A foreign company may also apply: section 8(1) of the FAIS Act expressly mentions an applicant not domiciled in South Africa. It is important not only to correctly assemble the main package, but also to take into account criteria on corporate structure, the qualifications of key persons and internal regulations.
Preparation of the document package
Key stage: compiling the full package on the FSCA forms. The list includes:
- FSP1 and FSP2: business information of the applicant and license categories
- FSP3 and FSP4A–FSP4D: directors, shareholders, fitness and propriety of the applicant and key individuals
- FSP5: representatives
- FSP6 and FSP12: compliance officer
- FSP7, FSP8 and FSP9: operational ability, financial soundness and external auditor
In one of COREDO's cases, a client from the EU had to adapt internal policies to the specifics of South African legislation to avoid additional requests from the regulator.
Timelines and stages of application review
Under section 8(2) of the FAIS Act, the regulator may request additional information and consider information from other sources, including other supervisory authorities. The applicant is given an opportunity to respond. The application is then granted or refused (section 8(3)).
When granting an application, the regulator may impose conditions and restrictions with regard to the category of services (section 8(4)). The FSCA does not state a processing time on its licensing pages. So plan your launch with a margin: the time depends on how complete the package is and how quickly requests are answered.
A tip from the COREDO team: prepare answers to likely questions about key individuals, the ownership structure and sources of funds before you file.
License costs: obtaining and maintaining
FSCA fees are set in separate documents: on its fit and proper page the FSCA refers to General Notice 1 of 2024 on the determination of fees. In addition, the FSCA collects regular levies. Check the amounts in the FSCA document in force on the filing date. The budget also covers the external auditor, the compliance function and the representatives' regulatory examinations.
It is important to account for expenses for annual updates of internal policies and staff training - COREDO's practice confirms that savings in these items can lead to fines or even suspension of the license.
In addition, one should consider the costs of preparing for international standards, since compliance with FATF requirements directly affects both the licensing process and the ability to continue operations in South Africa.
How does licensing in South Africa depend on the FATF and its standards?
FATF standards reach providers through the FIC Act. In February 2023 the FATF placed South Africa on its "grey list" of jurisdictions under increased monitoring. According to South Africa's National Treasury, the country exited that list on 24 October 2025.
Schedule 1 to the FIC Act lists accountable institutions, among them item 12 "Financial services provider" and item 22 "Crypto asset service providers". An accountable institution registers with the FIC within 90 days and has a risk management and compliance programme (RMCP). It identifies and verifies clients, keeps records and reports suspicious transactions. Reports are also filed on cash transactions above 49 999.99 ZAR.
In one COREDO project, a client had to completely revise its customer identification policy to comply not only with national but also international standards. This ensured successful licensing and minimized money laundering and terrorist financing risks.
Whether your company falls under an item of Schedule 1 depends on its exact wording and on your activity. So the AML/KYC policy is best prepared alongside the FSCA application, not after the license is granted.
Risks when obtaining and maintaining a license
The main risks are associated with non-compliance with the FAIS and FIC Acts. The FAIS Act allows a provider's license to be suspended and withdrawn.
Particular attention is paid to financial stability, transparency of corporate structure and the effectiveness of AML/KYC procedures.
In COREDO's practice there have been cases where companies lost their license due to insufficient transaction monitoring or weak internal audit.
To minimize risks, we recommend implementing automated monitoring systems and conducting regular independent audits.
risk management - not just a regulatory requirement, but a strategic development tool. COREDO's solutions enable clients to build flexible risk management systems adapted to the dynamics of the South African market.
In a context of rapidly changing regulatory requirements, effective risk management becomes a critical factor for the long-term resilience of the business.
Let's move on to crypto assets and technology.
Crypto assets and technology: what the FSCA regulates
By FSCA General Notice 1350 of 19 October 2022 (Government Gazette No. 47334), a crypto asset was declared a financial product under the FAIS Act. The notice defines a crypto asset as a digital representation of value that is not issued by a central bank, applies cryptographic techniques and uses distributed ledger technology.
The consequence is simple: anyone who, as a regular feature of business, gives advice or renders intermediary services in crypto assets must hold an FSP license or be a representative of a licensed provider. The FSCA states separately that crypto asset service providers (CASPs) must also obtain a license.
According to the joint communication of the SARB and the FSCA, intermediation in payments with crypto assets also requires a license under the FAIS Act. Authorisation under the NPS Act is currently not needed for such activity. The SARB nevertheless keeps the power to regulate such payments in the future.
In one of COREDO's cases, a client implemented an automatic customer verification system based on artificial intelligence, which increased payment processing speed and reduced operational risks.
Such technologies are becoming the new standard for financial service providers in South Africa.
Technology also affects licensing: under section 16(1)(b) of the FAIS Act, the code of conduct obliges providers to have and effectively employ resources, procedures and technological systems.
How to obtain a license: step-by-step guide
COREDO's experience shows that successfully obtaining a financial service provider license in South Africa requires a clear step-by-step plan:
- Define the activity: advice and intermediation under the FAIS Act, payment services under the NPS Act, or banking and insurance business.
- Choose the FSP license category and the financial products (form FSP2).
- Prepare key individuals and representatives for the requirements of Board Notice 194 of 2017.
- Develop AML/KYC, risk management and internal control policies and check whether registration with the FIC is required.
- File the application through the FSCA system and engage proactively with the regulator's requests.
To optimize the process, the COREDO team recommends using digital tools for preparing and storing documents, as well as engaging independent experts in advance to assess the business plan and compliance procedures. This approach reduces costs and minimizes the likelihood of refusal.
Consequences of a license refusal for business and development
Refusal of a financial service provider license in South Africa can be caused by insufficient document preparation, an opaque ownership structure, or non-compliance with AML/KYC standards. The regulator must notify the applicant of a refusal and give reasons (section 8(6) of the FAIS Act). It is important to understand that a refusal is not a sentence: the COREDO team has assisted clients at the appeal stage, helping to address comments and resubmit the application.
The consequences of a refusal include not only financial losses but also reputational risks.
Nevertheless, with a competent approach and timely adjustment of business processes, it is possible to restore market positions.
Obtaining an FSP license opens up new prospects: expanding the product range, entering international markets, attracting investment. The prospects for the development of financial services in South Africa directly depend on companies' readiness to integrate new technologies and comply with international standards.
Key conclusions and recommendations
A financial service provider license in South Africa is not only a formal permit but also a strategic asset that ensures legality and client trust. Successful licensing requires understanding the boundaries: the FSCA issues the FSP license under the FAIS Act, the SARB regulates the payment system under the NPS Act, and the FIC Act sets the AML duties.
COREDO's practice confirms: a comprehensive approach, attention to detail, and the use of modern technologies make it possible not only to complete the licensing procedure but also to build a sustainable business in South Africa.
For entrepreneurs and executives interested in international expansion, this market opens up unique opportunities, provided there is professional support and strategic planning.
If you are ready for new challenges and want to gain a competitive advantage in the South African financial services market, the COREDO team is always ready to share its experience. We will help at every stage of the journey.