Reserve Bank fines 5 SA banks after money laundering probe

The South African Reserve Bank (SARB) has imposed fines on five banks relating 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.

The fines amount to R34.5 million, while the central bank ordered the financial institutions to all take remedial action.

The five banks include: GBS Mutual Bank, Habib Overseas Bank, Investec Bank, The South African Bank of Athens, and Standard Chartered Bank – Johannesburg Branch.

The inspections were conducted in terms of the FIC Act which mandates the SARB to ensure that banks have adequate controls in place to combat money laundering and 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 administrative sanctions imposed on the five banks are as follows:

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.

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Reserve Bank fines 5 SA banks after money laundering probe