The South African Reserve Bank (SARB) has issued Standard Bank with an administrative penalty amounting to R13-million for failing to conduct ongoing due diligence on two of the lender’s clients.
The Reserve Bank’s Prudential Authority (PA) imposed the sanction after the lender failed to comply with certain provisions of the FIC Act, following an inspection conducted on SBSA in terms of Section 45B of the FIC (Financial Intelligence Centre) Act in 2022.
Failure to comply with provisions of the FIC Act
“The administrative sanctions imposed on SBSA are due to its failure to comply with certain provisions of the FIC Act and consist of six cautions not to repeat the conduct that led to the non-compliance and a financial penalty totalling R13-million,” said the Prudential Authority in a statement released on Friday just after 5pm, when the markets have closed.
The authority, which is mandated to supervise and enforce compliance by accountable institutions with the provisions of the FIC Act 38 of 2001, imposed the administrative sanctions on Standard Bank for its failure to timeously report 17, 259 suspicious and unusual transaction reports and/or SARs to the FIC.
Due to this transgression, the PA imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R4-million.
Series of FIC Act violations
Standard Bank also closed 94, 558 suspicious and unusual transaction reports or suspicious and unusual activity reports alerts beyond the 15-day reporting period as per regulation 24(3) of the Regulations to the FIC Act.
For this transgression, the PA imposed a caution not to repeat the conduct, which led to the non-compliance and a hefty financial penalty of R8-million.
The bank was also sanctioned for failing to comply with a section of the FIC Act by not conducting ongoing due diligence in respect of two of its clients, with no due diligence reviews undertaken in 2018 and 2019.
“Prudential Authority imposed a caution not to repeat the conduct that led to the non-compliance.
Suspicious and unusual transaction reports
“The bank also failed to comply with a section of the FIC Act by not keeping a record of the dates on which 43 suspicious and unusual transaction reports (STRs) or suspicious and unusual activity reports (SARs) were submitted to the FIC.
“The PA imposed a caution not to repeat the conduct that led to the non-compliance. In addition, Standard Bank failed to timeously report 1, 466 cash transaction reports and/or cash transaction aggregation reports to the FIC.”
SBSA failed to comply with Section 29 of the FIC Act in that it failed to report one STR to the FIC.
The PA imposed a caution not to repeat the conduct, which led to the non-compliance and a financial penalty of R1-million.
ATM monitoring systems
The bank also failed to comply with the law when 75, 729 automated transaction monitoring system alerts were not timeously attended to within 48 hours.
“The PA confirms that SBSA cooperated with the PA and has undertaken the necessary remedial action to address the identified compliance deficiencies and control weaknesses,” said the Prudential Authority.
