Reserve Bank
By Nkosana Khumalo
The South African Reserve Bank’s Prudential Authority has imposed significant fines on HSBC Bank Plc and Bidvest Bank for failing to comply with the provisions of the Financial Intelligence Centre Act (FIC Act). These penalties come as part of ongoing efforts to ensure that financial institutions adhere to strict anti-money laundering (AML) and counter-terrorist financing (CTF) regulations, which are crucial in South Africa’s attempts to remove itself from the Financial Action Task Force’s (FATF) grey list.
HSBC Bank Fined R9.5 Million for FIC Act Violations
HSBC Bank Plc, Johannesburg Branch, has been fined R9.5 million, with R4 million of this amount conditionally suspended for 36 months. The bank was found to have failed in its customer due diligence (CDD) obligations. Specifically, HSBC did not adequately verify the identities of the beneficial owners of several customer accounts. In addition to the monetary penalties, the Prudential Authority issued HSBC with a formal caution, warning them not to repeat these lapses.
These fines come on the heels of HSBC’s announcement that it is exiting the South African market by selling its corporate branch to FirstRand Bank as part of its strategy to divest non-core assets. This exit signals a significant shift, as HSBC has long been a major player in the global financial sector .
Bidvest Bank Fined R5 Million
Bidvest Bank was similarly sanctioned after failing to meet its FIC Act obligations. The South African Reserve Bank’s Prudential Authority imposed a fine of R5 million, with R2.5 million suspended for 12 months. The violations stemmed from deficiencies in the bank’s Risk Management and Compliance Programme (RMCP), which is required to prevent money laundering and financing of terrorist activities. The bank was issued a caution and given remedial steps to correct its shortcomings .
SARB’s Push to Enhance Compliance
The South African Reserve Bank has been ramping up its enforcement of the FIC Act as part of a broader strategy to address the country’s position on the FATF grey list. Non-compliance by major financial institutions undermines these efforts and creates vulnerabilities within the financial system. Both HSBC and Bidvest Bank have cooperated with the authorities and are taking steps to address the identified deficiencies, according to statements by the Prudential Authority.
These fines follow other significant penalties in the financial sector, including sanctions imposed on Old Mutual just a week earlier, highlighting SARB’s ongoing commitment to ensuring that institutions meet regulatory standards to combat financial crimes .
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