SARB Fines Five SA Banks For Not Combating Money Laundering!

South Africa’s reserve banks (SARB) has penalized five banks for relenting in the measures meant to help combat money laundering in the country.

The five banks namely GBS Mutual Bank, Habib Overseas Bank, Investec Bank, the South African Bank of Athens, and Standard Chartered Bank – Johannesburg Branch, were fined the sum of  R34.5 million by SARB in relation to weaknesses in control measures to combat money laundering.

The penalties were imposed after the Reserve Bank conducted routine inspections in terms of the Financial Intelligence Centre Act (FIC Act) and found weaknesses in each of the banks’ control measures.

SARB took to this inspection as mandated by FIC Act following the institution’s terms to ensure that banks adequately control and combat money laundering and the financing of terrorism in the country’s financial system.

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“This will ensure that the banking system is not used to launder the proceeds of crime (money laundering) or the financing of terrorism.”

“The administrative sanctions were not imposed because these banks were found to have facilitated transactions involving money laundering or the financing of terrorism but because of weaknesses in each of the banks’ control measures,” the Reserve Bank said.

The five banks were given the following administrative sanctions:

Investec Bank: A financial penalty of R20 million and a directive to take remedial action to address deficiencies in the following area:

  • Failure to implement adequate processes and working methods in relation to the sanctions screening of related parties of customers to ensure that the bank complies with its reporting duties.

Standard Chartered Bank – Johannesburg Branch: A financial penalty of R10 million, a reprimand and a directive to take remedial action to address deficiencies in the following areas:

  • Identifying and verifying customers’ details; and
  • Failure to report certain cash transactions above R24 999.99 to the Financial Intelligence Centre.

The South African Bank of Athens: A financial penalty of R3 million, a reprimand and a directive to take remedial action to address deficiencies in the following areas:

  • Identifying and verifying customers’ details; and
  • Failure to implement adequate processes and working methods in relation to the sanctions screening of customers to ensure that the bank complies with its reporting duties.

Habib Overseas Bank: A financial penalty of R1 million and a directive to take remedial action to address deficiencies in the following area:

  • Inadequate controls and working methods pertaining to the reporting of suspicious and unusual transactions

GBS Mutual Bank: A financial penalty of R500,000, a reprimand and a directive to take remedial action to address deficiencies in the following areas:

  • Identifying and verifying customers’ details (better known as know-your-customer or KYC requirements);
  • Training of employees to enable them to comply with the provisions of the FIC Act and the bank’s internal rules; and
  • Failure to implement adequate processes and working methods in relation to the sanctions screening of customers to ensure that the bank complies with its reporting duties.

SARB has been active in probing the control measures of banks to stop money laundering and terrorist funding, it explained that Section 45C(3) of the FIC Act stated out the types of administrative sanctions a supervisory body such as the office of the Registrar of Banks may impose on banks for non-compliance with the FIC Act.

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