Standard Bank hit with R13 million sanction in South Africa

The South African Reserve Bank’s Prudential Authority (PA) recently fined Standard Bank South Africa (SBSA) R13 million for failing to comply with certain legal requirements under the Financial Intelligence Centre Act (FIC Act).
This follows an inspection conducted by the PA in 2022, where several lapses in compliance were identified.
As a result, The PA has imposed administrative sanctions on Standard Bank South Africa.
The FIC Act sets rules that financial institutions must follow to prevent money laundering, terrorism financing, and other illegal activities.
The PA found that SBSA had not fulfilled several important obligations under the FIC Act.
Among the issues is that the bank failed to conduct ongoing due diligence for two clients in 2018 and 2019, as required by law.
Due diligence is crucial for monitoring clients’ financial activities to identify potential risks. This oversight led to a caution from the PA, instructing the bank not to repeat this conduct.
Another violation involved SBSA’s failure to keep proper records of the dates when it submitted 43 suspicious and unusual transaction reports (STRs) or activity reports (SARs) to the Financial Intelligence Centre (FIC).
Accurate record-keeping is vital for tracking and addressing potentially suspicious financial activities. This failure also resulted in a caution from the PA.
The bank further failed to report over 1,400 cash transactions to the FIC on time and, more significantly, delayed the submission of 17,259 STRs and SARs.
Reporting these transactions promptly is critical to flagging and investigating potential financial crimes. For these delays, the PA issued another caution and imposed financial penalties totalling R5 million.
One particularly notable lapse involved SBSA’s automated transaction monitoring system.
The bank failed to address 75,729 alerts within the required 48 hours and delayed closing 94,558 alerts beyond the 15-day reporting period set by regulations.
These delays raised serious concerns about the bank’s ability to detect and act on suspicious transactions in a timely manner. As a result, the PA imposed an additional financial penalty of R8 million.
While these violations highlight significant shortcomings, the PA acknowledged that SBSA cooperated fully during the investigation and took steps to correct the issues.
The bank has implemented measures to address its compliance deficiencies and strengthen its internal controls to ensure such lapses do not happen again.
The PA’s actions underscore its role in ensuring financial institutions adhere to laws that combat financial crime.
By imposing administrative sanctions, including substantial financial penalties and formal cautions, the PA aims to maintain the integrity of South Africa’s financial system.
The fines and corrective measures serve as a reminder to all financial institutions about the importance of strict compliance with regulations designed to protect the economy from illicit activities.
Standard Bank’s cooperation and remedial actions demonstrate its commitment to addressing these issues, even as the penalties highlight the serious consequences of non-compliance.