The South African Reserve Bank (Sarb) said on Wednesday it had fined the country’s four largest banks a collective R125 million for failing to implement adequate anti-money laundering controls.
The sanctions imposed on Absa, FirstRand, Nedbank and Standard Bank relate to failure to comply with the Financial Intelligence Centre Act (Fica), which aims to combat money laundering and the financing of terrorism by legislating the necessary controls that banks should have in place.
Sarb conducted inspections at the Big Four and concluded that none of them had the appropriate measures in place to ensure compliance with the relevant provisions of Fica.
Stemming from these findings, the Reserve Bank has imposed administrative sanctions to the tune of R125 million and ordered the banks to take remedial action to address the issues identified.
A breakdown of the fines
All the banks were found wanting on customer identification and verification processes, and all (except Nedbank) failed to adequately maintain customer and transactional records.
Another common deficiency, which all the banks except Nedbank were told to address, related to the controls surrounding suspicious and unusual transactions (anti-money laundering monitoring).
A spokesperson from Absa said that it had taken significant steps to further enhance compliance programmes in order to rectify areas identified by the Sarb. “These measures are integral to the R1.2 billion programme that Absa announced in August last year, aimed specifically at enhancing the experience of customers,” the spokesperson said.
Absa was fined R10 million by the Reserve Bank.
Nedbank and Standard Bank, fined R25 million and R60 million respectively, needed to improve controls relating to the detection of property associated with terrorists.
“These are administrative deficiencies and neither Nedbank nor its staff has been found to be guilty of, nor was there any evidence of, any money laundering or terrorist financing activities,” Nedbank said.
Standard Bank’s penalty took cognisance of its failure to report all cash transactions above R25 000 to the Financial Intelligence Centre (FIC). Standard Bank spokesperson, Erik Larsen said it had taken “immediate remedial action to address the issues identified by the SARB and has initiated a programme to address the SARB findings”.
FirstRand, which was fined R30 million, said it had made significant investments into the areas identified by the Sarb but acknowledged that “some weaknesses remain” and it remains “fully committed to resolving these”. According to the bank, the identified non-compliance has not financially prejudiced any of its customers.
According to a statement issued by the Sarb, each bank must pay the financial penalty imposed into the Criminal Assets Recovery Account, as required by Fica.
“The administrative sanctions are not an indication that the banks in question have in any way facilitated transactions involving money laundering and the financing of terrorism,” the Sarb said.
Nonetheless, director at the FIC, Dr Murray Michell, pointed out that institutions accountable to Fica “have the responsibility to ensure that their systems are watertight and maintain the highest levels of integrity”.
“The danger of not fulfilling compliance measures can open the door to criminals abusing our institutions for criminal activities,” Dr Michell said.