The South African Reserve Bank (SARB) has imposed administrative sanctions against two more financial institutions, Bidvest Bank and HSBC Bank Johannesburg Branch.
The sanctions come after SARB last Friday hit the JSE-listed Old Mutual Life Assurance with administrative sanctions totalling R15.9-illion. The amount of which R5.9-million is conditionally suspended for a period of 36 months as of July 23 2024. This came after Old Mutual was found to be non-compliant with certain provisions of the Financial Intelligence Centre (FIC) Act. The discovery followed a FIC inspection conducted in 2020.
This week it was Bidvest Bank and HSBC’s turn to get penalised.
Bidvest Bank and HSBC penalties on the heels of Old Mutual’s own
A media statement was released after the JSE had closed at 5pm on Friday. It said Bidvest Bank and HSBC were slapped with administrative sanctions. The penalties were due to non-compliance with the provisions of the FIC Act 38 of 2001.
This follows a FIC Act inspection conducted in 2022 for Bidvest and 2021 for HSBC.
“The Prudential Authority (PA), operating within the administration of the SARB, is mandated to supervise and enforce compliance by accountable institutions with the provisions of the FIC Act or any order. [And] determination or directive made in terms thereof,” said the Reserve Bank in media statements.
“The administrative sanctions imposed on Bidvest Bank are due to its failure to comply with a provision of the FIC Act. [They] consist of a caution not to repeat the conduct which led to the non-compliance. And a financial penalty of R5-million. R2.5-million of which is conditionally suspended for a period of 12 months as from 23 August 2024,” said the SARB.
Bidvest failure to implement Risk Management and Compliance Programme
The sanctions imposed on Bidvest stem from failure to implement its Risk Management and Compliance Programme. This in relation to the assessed trade-based transactions in respect of a sample of clients assessed.
Relating to HSBC, the administrative sanctions are due to its failure to comply with certain provisions of the FIC Act. They consist of three cautions and a financial penalty totalling R9.5-million. And R4 million of which is conditionally suspended for a period of 36 months as from June 10 2024.
The administrative sanctions on HSBC stem from its failure to comply with its customer due diligence obligations. This in that it failed to adequately conduct customer due diligence on sampled active customer relationships.
“The non-compliance inter alia included deficiencies in the identification. And verification of the beneficial owners of clients,” read the statement from SARB.
In addition, the HSBC failed to comply with FIC Act Directive 5 of 2019. This in that it failed to attend to automated transaction monitoring system (ATMS) alerts. It failed to do so within the required 48-hour period.
“The PA imposed a caution not to repeat the conduct which led to the non-compliance and a penalty of R1.5-million.”
HSBC penalty due to failure to comply with the FIC Act
HSBC also failed to comply with the FIC Act. This it did by inadequately developing, documenting, and/or implementing its risk management and compliance programme. This was the programme that would effectively enable it to identify and verify beneficial owners of clients.
“The PA imposed a caution not to repeat the conduct. [This conduct] led to the non-compliance and a financial penalty of R3-million. R1.5- million of which is conditionally suspended for a period of 36 months.
“The PA confirms that HSBC cooperated with the PA. And it has undertaken the necessary remedial action to address the identified compliance deficiencies and control weaknesses.”
