The South African Reserve Bank (SARB) has imposed administrative sanctions and fines to the tune of about R25 million on both Bidvest Bank and HSBC over non-compliance with the Financial Intelligence Centre Act (FICA).

The fines cumulatively amount to at least R25 million, but conditional suspensions may apply.

Last week, the Sarb imposed similar sanctions amounting to at R15 million against the Old Mutual Life Assurance Company Limited, also for FICA non-compliance.

Why fine Bidvest?

The Reserve Bank said the reason for these sanctions was due to Bidvest Bank’s non-compliance with FICA after an inspection was conducted in 2022.

“The administrative sanctions imposed on Bidvest Bank are due to its failure to comply with a provision of the FICA and consist of a caution not to repeat the conduct which led to the non-compliance,” the Reserve Bank said in a statement.

As such the SARB has imposed a R5 million penalty on Bidvest Bank. The Sarb said half of this sanction was conditionally suspended for a period of 12 months.

The central bank said that Bidvest Bank failed to comply with section 42 of the FICA by failing to implement its Risk Management and Compliance Programme (RMCP). This was in direct relation to the assessed trade-based transactions in respect of a sample of clients assessed.

The Prudential Authority (PA) operates within the administration of the Sarb and is mandated to supervise and enforce compliance.

The PA has also cautioned Bidvest, warning the bank not to repeat this conduct.

Why fine HSBC Bank?

The Reserve Bank has also imposed administrative sanctions on HSBC Bank for its non-compliance with the FICA, following an inspection in 2021.

The HSBC failed to comply with certain provisions of the FICA and was given three warnings and a financial penalty totalling R9.5 million.

The Reserve Bank said that R4 million is conditionally suspended for a period of 36 months.

The HSBC bank was found to have failed to comply with its customer due diligence (CDD) obligations, the central bank said.

The bank failed to adequately conduct CDD on sampled active customer relationships, the SARB noted.

“The non-compliance inter alia included deficiencies in the identification and verification of the beneficial owners of clients,” SARB said.

The PA has warned HSBC to not repeat this conduct and levied a R5 million fine against the bank for this act alone, though R2.5 million is conditionally suspended for three years.

HSBC also failed to comply with FICA Directive 5 of 2019 in that it failed to attend to automated transaction monitoring system (ATMS) alerts within the required 48-hour period.

Here again, the PA warned the bank to not do this again and fined the bank R1.5 million.

Lastly, HSBC failed to comply with section 42 of the FICA in that it failed to adequately develop, document and/or implement its RMCP that would effectively enable it to identify and verify beneficial owners of clients.

The PA levied a financial penalty of R3 million on the bank but said that R1.5 million of this fine was conditionally suspended for three years.

Meanwhile, HSBC recently announced that it was leaving South Africa and would vacate its SA operations, subject to regulatory approval.

The UK-based bank said that it concluded its last deal with Absa and FirstRand at the end of September.

IOL BUSINESS