The Prudential Authority (PA), which is part of the South African Reserve Bank, has fined Standard Bank of South Africa Limited (Standard Bank) R13 million.
This happened after the PA found that the bank had broken several financial rules under the Financial Intelligence Centre Act (FIC Act).
The PA explained that the FIC Act exists to prevent crimes like money laundering and the funding of illegal activities.
It requires banks to keep a close watch on customer transactions and report anything suspicious to the Financial Intelligence Centre (FIC).
Something, the PA claims, Standard Bank faltered in.
An investigation by the PA in 2022 revealed that Standard Bank failed to follow these rules in several ways. As a result, the PA imposed administrative sanctions. A sanction is a punishment or penalty given to a company or person who breaks the law. In this case, the sanctions included six cautions (warnings not to repeat the same mistakes) and a financial penalty of R13 million.
STANDARD BANK’S WRONGDOINGS
According to the South African Reserve Bank, Standard Bank broke the law in the following ways:
NOT CONDUCTING ONGOING CHECKS ON CLIENTS
The PA claimed that the bank did not conduct regular checks, known as “due diligence,” on two of its clients in 2018 and 2019.
This is required by law to ensure that customers are not engaging in suspicious financial activities. The PA issued a warning to Standard Bank not to make this mistake again.
NOT KEEPING PROPER RECORDS
The PA reported that the bank failed to keep a record of when it submitted 43 suspicious transaction reports (STRs) and suspicious activity reports (SARs) to the FIC.
“These reports are crucial for tracking illegal activity” the PA explained. The authority issued another warning about this.
REPORTING CASH TRANSACTIONS TOO LATE
The PA said that Standard Bank was supposed to report large cash transactions to the FIC within a specific time frame. Instead, it delayed reporting 1,466 cash transactions.
DELAYING REPORTS ON SUSPICIOUS ACTIVITIES
The bank was also accused of late in reporting 17,259 suspicious transactions. For this, the PA issued another warning and fined the bank R4 million.
FAILING TO REPORT ONE SUSPICIOUS TRANSACTION
In one case, Standard Bank was accused of not reporting a suspicious transaction at all. This earned the bank another warning and a fine of R1 million.
IGNORING TRANSACTION ALERTS
Standard Bank has a system that flags unusual transactions. However, the PA found that:
- 75,729 alerts were not dealt with within the required 48 hours.
- 94,558 alerts about suspicious activities were closed after the allowed 15-day period.
STANDARD BANK PROMISES TO FIX ITS MISTAKES
The South African Reserve Bank confirmed that Standard Bank cooperated during the investigation and has already started fixing its mistakes. The bank has promised to strengthen its systems and controls to avoid these issues in the future.
The Prudential Authority plays a key role in ensuring banks follow the law to protect South Africa’s financial system.
DO YOU BANK WITH STANDARD BANK? HOW WOULD YOU RATE THEIR SERVICES?
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