The Prudential Authority (PA), operating under the South African Reserve Bank (SARB), has levied a R13 million financial penalty on Standard Bank of South Africa Limited (SBSA). The sanction follows the bank’s failure to meet compliance obligations under the Financial Intelligence Centre Act 38 of 2001 (FIC Act).
The PA issued the penalty after a 2022 inspection conducted under Section 45B of the FIC Act. According to SARB’s official statement, the sanctions include six cautions for SBSA to avoid repeating similar misconduct and a financial penalty totaling R13 million.
Key Compliance Failures and Sanctions
The non-compliance issues leading to the sanctions highlight significant lapses in SBSA’s adherence to the FIC Act, as detailed below:
- Failure to Conduct Ongoing Due Diligence (Section 21C)
- SBSA failed to perform due diligence on two clients, with no reviews conducted in 2018 and 2019.
- Sanction: Caution against repeating the misconduct.
- Failure to Conduct Ongoing Due Diligence (Section 21C)
- Failure to Maintain Records of STR/SAR Dates (Section 23(c))
- The bank failed to record submission dates for 43 suspicious transaction/activity reports (STRs/SARs).
- Sanction: Caution against repeating the misconduct.
- Failure to Maintain Records of STR/SAR Dates (Section 23(c))
- Delayed Reporting of Cash Transactions (Section 28)
- SBSA delayed the submission of 1,466 cash transaction reports or aggregation reports.
- Sanction: Caution against repeating the misconduct.
- Delayed Reporting of Cash Transactions (Section 28)
- Delayed Reporting of STRs/SARs (Section 29)
- 17,259 suspicious transaction reports were submitted late to the Financial Intelligence Centre (FIC).
- Sanction: Caution and a financial penalty of R4 million.
- Delayed Reporting of STRs/SARs (Section 29)
- Failure to Report a Suspicious Transaction (Section 29)
- SBSA failed to report one STR entirely.
- Sanction: Caution and a financial penalty of R1 million.
- Failure to Report a Suspicious Transaction (Section 29)
- Non-Compliance with FIC Act Directive 5 of 2019
- 75,729 automated transaction monitoring alerts were not attended to within 48 hours.
- 94,558 STR/SAR alerts were closed beyond the 15-day reporting period stipulated by regulation.
- Sanction: Caution not to repeat the conduct.
- Non-Compliance with FIC Act Directive 5 of 2019
Remedial Action Taken
Despite the compliance failures, SARB confirmed that SBSA cooperated fully with the PA and has implemented remedial measures to address the identified deficiencies. These steps are aimed at strengthening compliance controls and preventing future lapses.
Broader Implications
The Prudential Authority’s enforcement of these sanctions underscores its commitment to ensuring that financial institutions adhere strictly to the FIC Act. Compliance with regulations like these is critical for combating financial crimes such as money laundering and terrorism financing.
While SBSA’s cooperation and remedial actions are commendable, the penalty serves as a stark reminder of the consequences financial institutions face when lapses occur.
Conclusion
The R13 million penalty against Standard Bank highlights the importance of rigorous compliance with the FIC Act. As one of South Africa’s leading financial institutions, SBSA’s swift remedial action demonstrates its commitment to addressing shortcomings. However, the case also reflects the growing need for accountability in the financial sector to maintain trust and integrity.
