THE SA RESERVE Bank (SARB) is continuing to crack down on life insurers with weaknesses in money laundering control measures and announced on Friday that it had imposed administrative sanctions on Sanlam Life and Fedgroup Life.
In April the SARB also imposed administrative sanctions on Discovery Life after it found weaknesses in the life insurer’s money laundering control measures and directed the life insurer to take remedial actions.
It is a total financial penalty of R1.5 million (excluding an amount of R500 000 which is suspended for three years).
Sanlam Life faced a penalty of R1m, excluding an amount of R500,000, which was suspended for three years from July 28, while Fedgroup Life was fined R140 000.
The SARB said the penalties followed inspections conducted in terms of the Financial Intelligence Centre Act (Fica) and both firms would have to take remedial action.
“It should be noted that the administrative sanctions were imposed because of weaknesses identified with regards to compliance with the provisions of the FIC Act by the aforementioned insurers, and not because the said life insurers were found to have facilitated transactions involving money laundering or the financing of terrorism,” SARB said.
The Prudential Authority (PA) supervises licensed life insurers with the FIC Act and enforce compliance with the provisions of the act.
The SARB said Sanlam Life had accepted the administrative sanctions issued by the PA, made payment of the financial penalty, and agreed to focus on enhancing its anti-money laundering and counter-terrorist financing compliance.
However, Fedgroup Life had lodged an appeal to review the decision of the PA on the amount of the financial penalty imposed, but the matters of non-compliance were not in dispute.
“Following the hearing, the Appeal Board ruled that the initial penalties of R500 000 and R250 000 imposed by the PA for non-compliance with sections 43 and 42A of the FIC Act be reduced to R80 000 and R60 000, respectively,” SARB said.
Sanlam Life had breached the FIC Act as it failed to comply with enhanced due diligence requirements in respect of domestic prominent influential persons, the SARB said.
“The PA imposed a caution not to repeat the conduct which led to the non-compliance in terms of section 45C(3)(a) of the FIC Act and a financial penalty of R1 million in terms of section 45C(3)(e) of the FIC Act,” it said.
Sanlam Life also failed to comply with cash threshold reporting requirements, which led to the firm being given a financial penalty of R500 000, suspended for three years.
Moreover, the SARB said the life insurer had failed to comply with suspicious transaction reporting requirements in terms of the Money Laundering and Terrorist Financing Control Regulations.
As regards Fedgroup Life, it had failed to comply with anti-money laundering and counter financing of terrorism compliance (AML/CFT) requirements linked to deficiencies identified in the firm’s training material and its failure to adequately train its employees.
The life insurer had also failed to comply with the governance of AML/ CFT compliance requirements.
This was in respect of deficiencies linked to the lack of customisation of the risk management and compliance programme of the group as well as the failure to provide documentary evidence relating to adequate oversight and monitoring of customer due diligence requirements, the duty to keep record and requisite reporting related obligations in terms of the FIC Act, the SARB said.