FSCA slaps fund manager with R16 million fine

 ·28 Feb 2024

The Financial Sector Conduct Authority (FSCA) has fined Ashburton Fund Managers R16 million for failing to comply with certain provisions of the Financial Intelligence Centre Act.

According to the FSCA, the fines were imposed because Ashburton developed a “defective” risk management and compliance (RMCP) programme for anti-money laundering and counter-terrorism financing.

The group said that the RMCP failed to set out the manner in which it would comply with the FIC Act as it relates to various regulations, including examining complex or unusually large transactions, unusual patterns of transactions, and other related activities.

The FSCA said that it considered Ashburton’s failures as serious violations of the FIC Act, “particularly in light of the nature, size, complexity and potential risk exposure of (Ashburton’s) business”.

“The requirement to understand and mitigate money laundering and terrorist financing risks through the implementation of an RMCP is vital not only because it assists accountable institutions to protect and maintain the integrity of their own businesses but also because it helps contribute to the integrity of the South African financial system as a whole,” the FSCA said.

Responding to the fine, Ashburton said it has already commenced a “remediation programme” to address the shortcomings identified by the authority, with the first “key milestones” already met.

“This programme includes enhancements to Ashburton’s financial crime policies and frameworks, as well as improvements to its client due diligence and screening processes,” it said.

The group stressed that the FSCA did not find any evidence that Ashburton facilitated any transactions involving terrorist financing or money laundering.

“Ashburton’s clients’ funds and investments are not affected by this in any way. We fully support the FIC Act and believe that a robust regulatory environment is crucial to protect our industry, considering South Africa’s greylisting”, it said.

The FSCA said that the sanction imposed on Ashburton should serve as a strong reminder that non-compliance with the FIC Act will not be tolerated.

“All accountable institutions are urged to continue reviewing and strengthening their anti-money laundering and terrorist financing risk and control environments. Failure to do so will result in firm regulatory action,” it said.

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