Reserve Bank fines Banking Mafia in SA ZAR 46.5m

The South African Reserve Bank (SARB) fined banks a total of R46.5m in 2016 due to weaknesses in their control measures. This is according to the Bank Supervision Department (BSD) Annual Report for 2016, which was released on Friday.

The penalties were part of administrative sanctions enforced by the Reserve Bank. In addition to the penalty, banks were directed to take remedial action to address their shortcomings.The banks had not been found to have facilitated money-laundering or terrorism financing, the report explained. Through the BSD, the Reserve Bank supervises banks to ensure that they comply with the Financial Intelligence Centre Act (FICA). “ _The FIC Act also stipulates that a supervisory body may impose an administrative sanction on an accountable institution for its failure to comply with the provisions of the FIC Act_ ,” the report read. This means that during 2016 the BSD assessed banks to ensure that they had the correct measures and controls to comply with Fica.

*Investec Bank*, which was slapped with a R20m penalty, was among the banks that were fined the most. It was issued because the bank failed to implement “adequate processes” and “working methods” in terms of screening customers and related parties for possible money laundering, to ensure the bank complies with FICA. The bank was also directed to take remedial action.

*Absa Bank* was fined R10m for weaknesses in the bank’s controls related to monitoring transactions.

The Johannesburg branch of *Standard Chartered Bank* was fined R10m and given a reprimand for failing to identify and verify customers’ details, and for failing to report cash transactions above R24 999.99 to the FIC.

The *South African Bank of Athens* was fined R3m and reprimanded for not identifying and verifying customers’ details, and failing to implement adequate processes to screen customers to ensure the bank complies with FICA.

*Habib Overseas Bank* was fined R1m due to its inadequate controls related to reporting suspicious and unusual transactions. Habib Bank was recently in the press as the Gupta Brothers attempted a take-over without SARB Approval! Earlier this year Gupta-linked Vardospan lost a court bid to buy a majority stake in Habib Bank. Vardospan failed to receive the required regulatory approval from SARB and National Treasury.

The remaining banks – *GBS Mutual* and the Johannesburg branch of *Société Générale* – were fined R500 000 and R2m respectively, while Société Générale was also further suspended for two years for not identifying and verifying customer details, and not maintaining transactional records.

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