This article was first published by Business Day on 7 October 2026
South Africa’s financial regulators may be forgiven for assuming that Washington’s latest restrictions on South African officials have little to do with them. However, they would be unwise to make that assumption.
The Financial Sector Conduct Authority (FSCA) and Prudential Authority (PA) should be asking themselves a decidedly uncomfortable question: Could the manner in which South Africa’s race-conscious transformation policies are translated into financial regulation expose senior regulatory officials and potentially members of their families, to adverse action by the United States?
The question is not fanciful. It arises directly from the language employed by Washington.
The measure expressly contemplates action against persons whom the US Secretary of State considers “responsible for, or complicit in” the enactment or implementation of laws or regulations that, among other things, enable race-based discrimination. Family members may also be affected.
South Africa has rejected Washington’s characterisation of its domestic policies. The sovereignty of South Africa to determine its own constitutional, legislative and economic policies is not in dispute.
However, sovereignty does not confer immunity upon individuals from the laws and foreign-policy decisions of other states.
That is the point with which South Africa’s financial regulators are now confronted.
The concern for FSCA and PA regulators is prospective. It arises from the breadth of the American formulation and more importantly, from the increasing regulatory role contemplated for the FSCA in implementing transformation policy.
Parliament makes laws. Regulators ordinarily administer and enforce them. Where a regulator is however, empowered to prescribe requirements, to impose conditions, to determine licensing outcomes, to supervise compliance and take enforcement action, the regulator is no longer merely a passive conduit for legislative policy.
This becomes particularly important in relation to the proposed Conduct of Financial Institutions (COFI) Bill. The FSCA itself has described COFI as potentially providing it with an enabling framework for advancing racial transformation and for establishing requirements applicable across financial institutions, accompanied by supervisory and enforcement mechanisms.
That would represent a significant development that places the FSCA in a far more direct position of responsibility for translating transformation policy into regulatory requirements and ensuring that financial institutions comply with them.
A regulator need not agree with Washington’s interpretation of South African transformation policy. Nor should it. But it would be imprudent for a regulator to proceed on the assumption that Washington’s interpretation is irrelevant.
The United States is plainly signalling that it regards certain forms of race-conscious South African policy as a matter upon which it is prepared to use its own immigration powers.
The immediate consequence of a US visa restriction is an immigration measure. It does not merely by virtue of its imposition, freeze the individual’s assets or prohibit every financial transaction involving that person.
But it would be imprudent to regard the matter as ending at the airport.
If Washington were subsequently to impose financial sanctions upon designated regulators, the consequences could be considerably more far-reaching.
Such measures could affect dealings involving US persons and financial institutions, property or financial interests within US jurisdictions, and jurisdictions whose international compliance systems are governed by US sanctions requirements.
Even absent a formal asset freeze, banks, investment managers, multinational corporations and professional-service firms frequently assess not only what the law requires but also the compliance and reputational risks associated with particular listed counterparties.
A person who becomes the subject of US restrictions may therefore encounter consequences extending far beyond the formal terms of the restriction itself.
None of this means that such consequences will follow from the present announcement; they may not.
It does mean that the possibility is sufficiently consequential to warrant examination now, rather than after individuals discover that regulatory decisions taken in Pretoria have acquired significance in Washington.
The prudent response is to make the legal architecture through which transformation is implemented exceptionally clear.
The FSCA and PA should be able to identify, provision by provision, the legal authority for every transformation-related regulatory requirement they impose. They should distinguish between obligations expressly prescribed by statute, requirements contained in subordinate legislation, licensing conditions, regulatory standards, supervisory policies and information collected for monitoring purposes.
These questions go to the legality of administrative action, the proper exercise of statutory discretion and the accountability of public officials. They also become more consequential when regulatory decisions may be scrutinised through an international geopolitical lens.
The FSCA’s and PA’s position within the international financial architecture makes the matter still more important.
South Africa learned during its recent experience with the Financial Action Task Force’s grey-listing process that domestic regulatory decisions do not remain domestic for very long. International financial institutions assess the South African regulatory environment according to their own legal, compliance and risk-management frameworks.
South Africa may legitimately defend its transformation policies. It may reject Washington’s characterisation of those policies. It may insist, correctly, that South African law must be interpreted by South African institutions in accordance with the Constitution and legislation enacted by Parliament.
But none of that answers the separate question of how an individual regulator may be treated by another sovereign state.
That is why the distinction between policy and implementation is so important.
The policy choice belongs to government and Parliament.
The responsibility for implementing regulatory requirements belongs to regulators.
Those officials should therefore know exactly what they are authorised to do, what discretion they possess, what safeguards constrain that discretion, and what legal basis supports each decision.
COFI makes this question more urgent because it potentially expands the regulatory machinery through which transformation requirements may be formulated, supervised and enforced.
The greater the regulatory discretion, the greater the need for precision.
There is also a broader lesson here for South Africa. International financial credibility rests not merely upon asserting that domestic policy is lawful. It rests upon demonstrating that the exercise of regulatory power is transparent, predictable, reviewable and anchored in clearly defined legal authority.
That is good administrative law, good regulatory practice and, in the present circumstances, it is prudent risk management.
The FSCA and PA should therefore not wait to discover whether Washington’s warning was intended to reach them.
They should examine the possibility that it could.
This is not a call for South Africa’s regulators to subordinate themselves to American policy preferences. It is not an argument against transformation. Nor is it an assertion that any present US visa restriction automatically carries personal financial consequences.
It is a simpler proposition.
When a foreign government expressly identifies the implementation of race-conscious laws and regulations as conduct that may have personal consequences for officials, regulators responsible for implementing such requirements should take notice.
They should ensure that every exercise of regulatory power is demonstrably required by law, procedurally defensible and capable of being explained without ambiguity.
Washington has put “implementation” on the table.
The FSCA and PA should ensure that if that word eventually points towards them, they know precisely what it means and precisely what they did.
