Following an inspection conducted in 2019, the South African Reserve Bank (SARB) imposed administrative sanctions on Nedbank Limited (Nedbank) for failure to comply with the FIC Act. The non-compliance relates to certain administrative provisions of the FIC Act.
It is important to note that there was no evidence of Nedbank being involved in or facilitating any transactions involving money laundering or the financing of terrorism. However, in view of the administrative sanction that Nedbank received, it is evident that non-compliance with the FIC Act continues to pose a significant regulatory risk for accountable and reporting institutions.
Due to the findings of the inspection, which are discussed below, administrative sanctions were imposed and included inter alia, cautions, reprimands, and a total financial penalty of R35 million, of which R15 million has been conditionally suspended. The administrative sanctions were based on Nedbank’s failure to comply with the following requirements of the FIC Act:
- Risk Management and Compliance Programme (RMCP)
Nedbank failed to:
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- Apply a risk-based approach across its business clusters in accordance with its RMCP;
- Apply enhanced due diligence controls;
- Risk-rate its clients;
- Provide evidence that it had developed and documented end-to-end procedures and working methods relating to its systems and processes used to onboard clients; and
- Provide evidence that its controls and/or oversight measures were able to extract the correct data that would allow it to accurately risk-rate its clients.
- Failure to comply with its record-keeping obligations.
- Failure to comply with its cash threshold reporting obligations, in that Nedbank failed to report a significant number of cash transactions that exceeded the threshold of R24 999.99
- Nedbank failed to comply with the requirement that it must be able to determine timeously when a transaction was reportable in terms of section 29.
- Governance related obligations, in that Nedbank was unable to evidence that senior management approval was obtained for its customer due diligence requirements before implementation.
In a statement issued by the SARB it was highlighted that Nedbank is cooperating with the Prudential Authority and continues to undertake the necessary remedial actions to address the identified compliance deficiencies and control weaknesses.