The South African Social Security Agency (Sassa), which oversees the payment of welfare grants to more than 16m people, said it will on Wednesday file a criminal case against Grindrod and a unit of Net1 UEPS Technologies, because it says they’ve failed to comply with an amended law that prohibits deductions from social grants.

In 2012, Sassa contracted Net1’s Cash Paymaster Services (CPS) to pay the grants into bank accounts. Grindrod’s banking unit provides the accounts into which the grants are paid.

“We sent a letter to CPS and Grindrod as soon as the new regulations were published and we got a response from them saying they didn’t agree with our interpretation of the legislation and they were not going to implement,” Dianne Dunkerley, executive manager of grants administration at Sassa, said in an interview.

“We’re now going to open a case because they are not complying with the new legislation,” she said.

The government last month amended regulations to stop insurance companies from deducting funeral-insurance premiums from grants the government pays out to support poor children.

The government also wants to halt what it said were illegal deductions for services such as mobile phone airtime. Net1 has filed its own legal case, challenging the amendment.