The South African Reserve Bank (SARB) has hit the JSE-listed Old Mutual Life Assurance (OMLACSA) with administrative sanctions totalling R15.9 million. The heavy sanctions come after OMLACSA’s non-compliance with certain provisions of the Financial Intelligence Centre (FIC) Act. This is following a FIC inspection conducted in 2020.
According to the Bank, the sanctions consist of four cautions and a financial penalty totalling R15.9 million, of which R5.9 million is conditionally suspended for a period of 36 months as of July 23 2024.
Failed to report suspicious transactions
“OMLACSA failed to timeously report on suspicious and unusual transactions to the FIC in compliance with its suspicious and unusual transaction reporting (STR) obligations. This in terms of Section 29 of the FIC Act, read with FIC Act Regulation 24(3).
“…OMLACSA failed to comply with Section 42 of the FIC Act in that it failed to adequately develop and implement its risk management and compliance programme (RMCP).
The Prudential Authority (PA) imposed a caution not to repeat the conduct which led to the non-compliance. OMLACSA failed to identify, assess and monitor its money laundering, terrorist financing and proliferation financing (ML/TF/PF) risks.
It also failed to adequately risk-rate clients prior to onboarding, said the Bank.
“The PA, operating within the administration of the SARB, is mandated to supervise and enforce compliance by accountable institutions. This with the provisions of the FIC Act or any order, determination or directive made in terms thereof,” said the Bank. It said this in a media statement released on Friday at 5.01pm, just after the JSE closed.
Customer due diligence obligations penalties
The Bank added that the sanctions imposed on OMLA also stem from its failure to comply with its customer due diligence (CDD) obligations. This in terms of sections 21 and/or 21A to 21H of the FIC Act. In that it failed to conduct CDD on sampled active customer relationships.
“The non-compliance, inter alia, included failures to verify the physical address of clients. Also failed to identify the beneficial owners of clients.
“And the PA imposed a caution not to repeat the conduct that led to the non-compliance. It imposed a penalty of R6-million, of which R2-million is conditionally suspended for a period of 36 months.”
The Bank said OMLAC failed to comply with its cash threshold reporting (CTR) obligations. This in terms of Section 28 of the FIC Act, read with FIC Act Regulations 22B, 22C and 24(4).
It failed to timeously report cash transactions above the prescribed limit to the FIC.
“The PA imposed a caution not to repeat the conduct that led to the non-compliance. And a penalty of R4.9 million, of which R1.9 million is conditionally suspended for a period of 36 months.
Methodology
It also failed to ensure that evidence that money laundering, terrorist financing risk rating methodology is applied consistently. And failed to implement its secondary money laundering and terrorist financing indicators.
OMLA failed to have evidence that it had documented its consideration of local geographical location risks. It failed to adequately implement anti-money laundering and countering the financing of terrorism obligations and controls. This in relation to its CDD, CTR and STR obligations, the Bank said.
The PA imposed a caution not to repeat the conduct which led to the non-compliance. It also imposed a financial penalty of R5-million, of which R2-million is conditionally suspended for 36 months.
The PA confirms that OMLACSA cooperated with the PA throughout the process. It has undertaken the necessary remedial action. This is to address all the identified compliance deficiencies and control weaknesses.
Old Mutual confirms it will pay the fine
Old Mutual said in a statement it has agreed to accept the administrative sanction, of which R10 million is payable upfront and R5.9 million suspended for three years.
“The fine is an administrative sanction stemming from gaps identified in the AML Program during the past inspection, not because Old Mutual was found to be a conduit for money laundering.
“OMLACSA remains committed to working with the regulator to ensure that it continuously meets the required standards. The PA has confirmed that OMLACSA cooperated with it throughout the process and has undertaken the necessary remedial action to address all the identified compliance deficiencies and control weaknesses.
In their statement, the PA reiterates: “The administrative sanctions imposed on OMLACSA are not due to it having any involvement in and/or facilitating any transactions relating to money laundering or the financing of terrorism.”
Old Mutual confirmed it would not appeal the sanction.
“Old Mutual is and will remain, committed to implementing robust processes and controls in the ongoing fight against money laundering and other illegal activities by criminals and syndicates targeting the broader financial services sector,” said the insurer.
