ELECTRONIC FUNDS TRANSFER: EXPLORING THE DIFFICULTIES OF SECURITY

Generally the banking laws, regulations and supervision were designed primarily to address the fundamental principle relating to safe and sound business practices by financial institutions. In order to maintain safe and sound business practice it is of outmost importance that customers are protected against losses resulting from inadequate remedies available to them. Banking by its very nature is a high risk business. However, the major risks associated with banking are legal risks, credit interest rates and liquidity. Internet banking has increased some of these risks by creating new ones. Electronic funds transfers are based on technology which by its nature is designed to extend the geographical reach of banks and customers. This kind of a market expansion extend beyond borders, therefore there will be problems which banks will try to avoid like regulation and supervision. Other regulatory and legal risks include, the uncertainty about legal requirements in some countries and jurisdiction ambiguities regarding the responsibilities of different national authorities. Customers and banks may be exposed to legal risks associated with non-compliance with different national laws and regulations including consumer protection laws, record keeping and report requirements. Due to insecurity created by electronic funds transfer, it of importance to analyse measures under South African Law and whether these measures can effectively prevent insecurity and what lessons can be learned from abroad.