The South African Reserve Bank (SARB) has issued administrative sanctions on five banks after it found that the banks had inadequate control measures. The SARB made this finding after conducting an inspection of the banks in terms of the Financial Intelligence Centre Act (FICA) which mandates the SARB to ensure that banks have adequate controls in place to combat money laundering and the financing of terrorism. The banks were ordered to implement remedial actions to ensure that their controls become more adequate.
The largest penalties were given to Standard Chartered and Investec Bank respectively. Standard Chartered Bank was issued with a penalty of R10 million for not identifying and verifying customers details and for failing to report certain cash transactions above R24 999.99 to the Financial Intelligence Centre.
Investec Bank was issued with the largest penalty of R20 million. In addition to this penalty, the bank was issued with a directive to implement remedial actions for their failure to carry out the adequate processes relating to the sanctions screening of related parties of customers which ensures that the bank complies with its reporting duties.
Each bank must pay the financial penalty imposed into the Criminal Assets Recovery Account as required by the FIC Act. Read the full publication here
The FIC Act also grants the FIC the authority to conduct inspections at accountable and reporting institutions. This means that the FIC also has the authority to inspect whether accountable/reporting institutions have adequate controls in place to combat money laundering and the financing of terrorism.
Therefore, FSPs must ensure that their FICA Internal Rules are up-to-date and that all staff within the FSP are familiar with their responsibilities and obligations to prevent financial crime activities which could implicate the FSP. It is also recommended that an FSP updates its Risk Management Plan as evidence that the FSP recognises financial crime activities as a risk area within the business. This will also serve as a record-keeping mechanism indicating that the Key Individual and other responsible persons are continuously monitoring the controls of the FSP to ensure that they remain adequate in the fight against financial crime.