The South African Reserve Bank (SARB) on Friday fined two banks, HSBC Johannesburg and Bidvest Bank, for non-compliance with the provisions of the Financial Intelligence Centre (FIC) Act following inspections conducted by the banking sector regulator.
SARB said in a statement that it had imposed administrative sanctions on HSBC Bank – Johannesburg Branch (HSBC), because of its non-compliance with the FIC, following an inspection by the central bank conducted in 2021.
The Prudential Authority (PA), which operates within the administration of the SARB, supervises and enforces compliance of the FIC Act by accountable institutions.
“The administrative sanctions imposed on HSBC are due to its failure to comply with certain provisions of the FIC Act and consist of three cautions and a financial penalty totalling R9.5 million, of which R4 million is conditionally suspended for a period of 36 months as from 10 June 2024,” the SARB said in a statement.
SARB said HSBC had failed to comply with its customer due diligence (CDD) obligations, in that it failed to adequately conduct CDD on sampled active customer relationships. The non-compliance included deficiencies in the identification and verification of the beneficial owners of clients.
For these transgressions, the PA imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R5m, of which R2.5m was conditionally suspended for a period of 36 months.
The SARB said HSBC had also failed to attend to automated transaction monitoring system (ATMS) alerts within the required 48-hour period, for which the PA imposed a caution not to repeat the conduct and a financial penalty of R1.5m.
HSBC also failed to adequately develop, document and implement its Risk Management and Compliance Programme (RMCP) that would enable it to identify and verify beneficial owners of clients. For this, the PA imposed a caution not to repeat the conduct and a R3m financial penalty, of which R1.5m was conditionally suspended for 36 months.
The PA said HSBC cooperated with the PA and has undertaken the necessary remedial action to address the compliance deficiencies and control weaknesses.
SARB also imposed administrative sanctions on Bidvest Bank as a result of its non-compliance with the provisions of the FIC Act, following an inspection in 2022.
The administrative sanctions imposed on Bidvest Bank consisted of a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R5m, of which R2.5m was conditionally suspended for a period of 12 months as from August 23, 2024.
Bidvest Bank also failed to implement its Risk Management and Compliance Programme (RMCP) in relation to the assessed trade-based transactions in respect of a sample of clients assessed. For this, the PA imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R5m, of which R2.5m was conditionally suspended for 12 months.
These sanctions underscore the importance of strict compliance with the FIC Act in the South African banking sector and demonstrate the commitment by SARB to maintain high standards of financial integrity and security.
BUSINESS REPORT