Absa Bank has been hit with administrative sanctions totaling R10 million following an inspection by the Prudential Authority (PA) in 2022. The enforcement action, announced on Friday, forms part of the PA’s mandate to ensure that institutions comply with the Financial Intelligence Centre Act (FIC Act) of 2001.
The PA’s investigation revealed serious breaches related to customer due diligence and transaction monitoring—key pillars in the fight against financial crime.
Key findings included:
- Inadequate customer due diligence on client files, specifically involving four foreign prominent public officials (FPPOs) and two politically exposed persons (PEPs) connected to state-owned enterprises.
- Failure to properly monitor automated transaction alerts, with over 8,000 alerts not attended to within the required 48-hour window, as set out in FIC Act Directive 5 of 2019.
- Some alerts were closed beyond the stipulated reporting period, raising further compliance concerns.
The R10 million penalty was broken down as follows:
- R7 million for lapses in customer due diligence practices.
- R3 million for shortcomings related to transaction monitoring.
In addition to the financial penalty, Absa received:
- Two cautions to avoid repeating the non-compliance.
- A formal reprimand issued by the PA.
Despite the serious nature of the infractions, the PA acknowledged Absa’s cooperation during the investigation and its commitment to implementing remedial actions to address the deficiencies.
The PA emphasized that failures to comply with the FIC Act not only carry financial consequences but also threaten the operational integrity of institutions and undermine public trust in the broader financial system.
As one of South Africa’s leading banks, Absa’s commitment to regulatory compliance will now face intense scrutiny as it works to restore confidence among stakeholders and maintain its standing in the competitive banking sector.
