The Prudential Authority (PA) has imposed administrative sanctions on three banks for non-compliance with certain provisions of the Financial Intelligence Centre Act (FICA).
The PA, operating within the administration of the South African Reserve Bank, is mandated to supervise and enforce compliance by accountable institutions with FICA.
The SARB publicised the sanctions this month, although the non-compliance was detected during inspections conducted in 2022.
The three banks are the South African branch of United States-based Citibank, the South African branch of the Bank of Taiwan, and HBZ Bank Limited, a subsidiary of Habib Bank AG Zurich.
The sanctions imposed on two of the banks included a fine, but one of the fines was fully and conditionally suspended.
The PA said all three banks co-operated with the Authority and have undertaken remedial actions to address the identified compliance deficiencies and control weaknesses.
Citibank
The PA found that Citibank failed to implement its Risk Management and Compliance Programme (RMCP) in relation to certain advance payment transactions.
Citibank was cautioned not to repeat the conduct that led to the non-compliance and fined R6 million, although the entire penalty was conditionally suspended for 12 months from 5 March 2025.
Bank of Taiwan
The Bank of Taiwan was also found to be non-compliant with section 42 of FICA because it failed to:
- Provide evidence that the bank’s executive committee approved material amendments to its RMCP Introduction Manual before their implementation.
- Adequately manage the recording of the annual review of its RMCP Introduction Manual, as stated in its governance policy.
- Implement its RMCP and undertake the requisite due diligence measures in relation to two of its assessed correspondent banking relationships in respect of Vostro accounts. (A Vostro account is a bank account that a domestic bank holds for a foreign bank, in the domestic bank’s currency.)
- Provide evidence that its Screening of Customers and Transactions Manual had been reviewed and approved after 2020.
The PA reprimanded the bank and cautioned it not to repeat the conduct that led to the non-compliance.
HBZ Bank
HBZ was fined a total of R9m, but the effective penalty was R7.5m because R1.5m was conditionally suspended for 24 months from 5 March 2025. The administrative sanctions also included three cautions and two reprimands.
- The PA found that HBZ was non-compliant with sections 21(1) and 21A of FICA because the bank did not adequately conduct customer due diligence (CDD) and enhanced due diligence on 18 of its active medium-risk-rated and five of its active high-risk-rated client files, respectively. This non-compliance resulted in a caution and a fine of R6m, of which R1m was conditionally suspended.
- HBZ also failed to comply with sections 22 and 23 of FICA because it did not keep records in relation to one of its high-risk trade finance active and terminated client relationships. The PA cautioned and reprimanded HBZ.
- HBZ was found to be non-complaint with section 42 of FICA because it failed to:
- Provide evidence for concluding that trade finance should be assigned an inherent risk rating of medium in the context of its business model.
- Provide a precise or confirmed residual risk rating for trade finance.
- Implement its RMCP in relation to seven of the assessed advance payment transactions.
- Implement its RMCP in relation to its CDD and record-keeping obligations.
The non-compliance with section 42 resulted in a caution, a reprimand, and a fine of R3m, of which R500 000 was conditionally suspended.