The Financial Intelligence Act (FICA) grants the South African Reserve Bank (SARB) with a mandate to ensure that banks have implemented adequate money laundering and terrorist financing controls. The SARB conducts inspections at the banks in order to assess whether the measures they have in place are adequate as per the requirements set by FICA.
The SARB issued two banks with administrative sanctions after conducting its assessments on the controls of the bank. ABSA Bank was issued with a financial penalty of R10 million after it was found to have “certain identified weaknesses in the bank’s controls and working methods pertaining to transaction monitoring.” The bank was therefore issued with a directive to implement remedial actions to remedy the weaknesses identified.
The second bank fined was Société Générale. They were issued a fine of R2 million and ordered to take remedial actions in identifying and verifying its customers’ details, also known as the Know Your Clients/KYC requirements. The bank was also ordered to implement remedial actions regarding maintaining customer and transactional records. This financial penalty has however been suspended for 2 years subject to the bank complying with the conditions prescribed by the SARB.
The findings by the SARB indicate the importance of accountable and reporting institutions to continuously monitor their internal controls. The fight against money laundering and funding of terrorist activities is a serious one and therefore all such institutions must ensure that their processes and internal rules are continuously aligned and reviewed. It is highly advised that accountable and reporting institutions ensure that their controls are adequate, as not doing so can lead to serious financial consequences.