Big Four bank hit with major fine in South Africa
Absa has received administrative sanctions from the Prudential Authority (PA) totalling R10 million for breaking the Financial Intelligence Centre Act (FICA).
The PA, which is part of the Reserve Bank, fined Absa for non-compliance with specific provisions of the FICA, following an inspection conducted in 2022.
The sanctions consist of two cautions not to repeat the conduct that led to the non-compliance, a reprimand and a financial penalty totalling R10 million.
Part of the sanctions imposed on Absa for failing to fully comply with sections 21(1) and 21A of the Act in that it failed to adequately conduct customer due diligence and enhanced due diligence on the following customers:
- Failure to adequately conduct customer due diligence on four of its foreign prominent public official (FPPO) client files and two of its politically exposed persons (PEP) in respect of state-owned enterprises; and
- Failure to adequately conduct enhanced due diligence on three of its domestic prominent influential persons (DPIPs) client files and five of its FFPO client files.
The PA imposed a caution not to repeat the conduct which led to the non-compliance, as well as a reprimand and a financial penalty of R7 million
Absa also failed to comply with FICA Directive 5 of 2019 in that:
- 8,559 reported automated transaction monitoring system (ATMS) alerts were not timeously attended to within 48 hours
- Four of the non-reportable ATMS alerts were not attended to within 48 hours; and
- Two non-reportable suspicious transaction report/suspicious activity report alerts were closed beyond the 15-day reporting period as stipulated by regulation 24(3) of the FIC Act Regulations.
The PA imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R3 million, bringing the total fines to R10 million.
The PA said that Absa cooperated with it and has undertaken the necessary remedial action to address the identified compliance issues and control weaknesses.
Absa is the latest bank to be fined by the PA, amid heightened scrutiny of South African financial service providers as the country tries to get off the Financial Action Task Force’s grey list.
Capitec was recently fined R56.25 million for failing to comply with FICA, with R10.5 million being suspended for 26 months from 30 July 2024.
Standard Bank was also fined R13 million at the start of the year for failing to abide by FICA. Absa and Standard Bank are part of South Africa’s Big Four banks, alongside FirstRand and Nedbank.
In 2024, Sasfin Bank was fined R210 million by the PA under the Banks Act, Financial Sector Regulation Act, and Financial Intelligence Centre Act.
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