The South African Reserve Bank (SARB) has imposed administrative penalties of R35 million on Nedbank Limited for failing to comply with certain administrative provisions of the Financial Intelligence Center Act (FICA).
On Friday, the SARB also ordered the bank to take corrective action following a 2019 FICA audit.
The central bank said in a statement that the administrative sanctions were imposed due to Nedbank’s failure to comply with certain administrative provisions of FICA.
“It is important to emphasize that there was no evidence that Nedbank was involved in or facilitated transactions related to money laundering or terrorist financing.
“The administrative sanctions imposed under section 45C (3) of the FIC Act include, inter alia, warnings, reprimands and a total financial penalty of 35 million rand, of which 15 million has been suspended.”
The SARB found that Nedbank failed to comply with its risk management and compliance program obligations under sections 42(1), 42(2) and 42(2A) of the FIC Act in that it did not:
- Apply a risk-based approach to all business clusters in accordance with the Risk Management and Compliance Program;
- Apply enhanced due diligence controls;
- The risk factor of its customers;
- Provide evidence that it has developed and documented end-to-end procedures and working methods related to its customer onboarding systems and processes; and
- Provide evidence that its controls and/or oversight were able to obtain the correct data to enable it to accurately assess the risk of its clients.
The Prudential Authority (PRA) imposed a warning, a reprimand and a financial penalty of 5 million rand, of which 2 million rand was suspended for 12 months.
Nedbank failed to comply with its record keeping obligations under sections 22, 23 and 24 of the FIC Act.
The PA imposed a reprimand and a financial penalty of 5 million rand, 3 million of which was suspended for 24 months.
“Nedbank failed to comply with its cash reporting obligations under section 28 of the FIC Act as it failed to report a significant amount of cash transactions exceeding the threshold of 24,999.99 rand. The PA imposed a warning, a reprimand and a financial penalty of 25 million rand, of which 10 million was suspended for 12 months,” the authority said.
The CA also found that Nedbank failed to comply with section 42(2)(o) of the FIC Act and Financial Intelligence Center Directive 5/201 as it failed to determine in a timely manner when a transaction was reportable under section 29 of the FIC Act.
In connection with this, PA was issued with a warning, a reprimand and an order to take measures to correct the situation.
The PA stated that Nedbank failed to comply with its AML/CFT governance obligations under sections 42A(1), 42A(2), 42A(3), 42(2)(b), 42 (2)(d) and 42(2)(f) of the FIC Act because he failed to demonstrate that senior management approval was obtained in accordance with the client’s pre-implementation due diligence requirements.
The PA imposed a warning not to repeat the conduct that led to the default.
The SARB said Nedbank is cooperating with the PA and continues to take the necessary remedial action to address the identified compliance and control deficiencies.
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