The South African Reserve Bank (SARB) conducted AML/CFT (Anti-money laundering and combating the financing of terrorism) inspections at

1. Absa Bank Limited (Absa),
2. FirstRand Bank Limited (FirstRand),
3. Nedbank Limited (Nedbank), and
4. The Standard Bank of South Africa Limited (Standard Bank).

In terms of the Financial Intelligence Centre Act, No. 38 of 2001 (FICA), the SARB is mandated to supervise and enforce banks’ compliance with FICA to ensure that the necessary anti-money laundering and combating the financing of terrorism controls are in place.

Flowing from these responsibilities, the inspections were conducted to assess whether the appropriate measures were in place to ensure compliance with the relevant provisions of FICA.

Stemming from the findings of the inspections, the SARB has imposed administrative sanctions, including the ordering of certain remedial action on the respective banks.

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 administrative sanctions imposed on the respective banks are as follows:

Absa: A financial penalty of R10 million, a reprimand, and a directive to take remedial action to address deficiencies in the following areas:

• Identifying and verifying customers’ details (better known as know-your-customer or KYC requirements)
• Maintaining customer and transactional records as prescribed
• The management and processing of potential suspicious and unusual transactions

FirstRand: A financial penalty of R30 million and a directive to take remedial action to address deficiencies in the following areas:

• Identifying and verifying customers’ details
• Maintaining  customer and transactional records as prescribed
• The governance processes for making amendments to automated suspicious and unusual transaction monitoring and reporting systems

Nedbank: A financial penalty of R25 million and a directive to take remedial action to address deficiencies in the following areas:

• Identifying and verifying customers’ details
• Controls and systems relating to the detection of property associated with terrorists and related activities

Standard Bank: A financial penalty of R60 million and a directive to take remedial action to address deficiencies in the following areas:

Identifying and verifying customers’ details

• Maintaining  customer and transactional records as prescribed
• Failure to report all cash transactions above R24 999.99 to the Financial Intelligence Centre
• Controls and systems for detecting property associated with terrorists and related activities
• The systems, processes and other resources necessary for detecting and reporting suspicious and unusual transactions

Each bank must pay the financial penalty imposed into the Criminal Assets Recovery Account as required by FICA.

All the banks are co-operating and working with the SARB to address the identified compliance deficiencies and control weaknesses, and have undertaken to remediate the identified shortcomings.

Link to South African Reserve Bank press release: click here : http://bit.ly/1sFzePf