Two big banks hit by sanctions in South Africa

The South African Reserve Bank has imposed administrative sanctions on Bidvest Bank and HSBC in South Africa.

On Friday, 4 October 2024, the South African Reserve Bank (SARB) announced it had taken action against these two banks.

It announced that it imposed sanctions against Bidvest Bank due to non-compliance with the provisions of the Financial Intelligence Centre Act 38 of 2001 (FIC Act).

The action followed a Financial Intelligence Centre Act inspection conducted in 2022, where it found non-compliance.

Bidvest Bank failed to implement its risk management and compliance programme (RMCP) regarding the assessed trade-based transactions.

The Prudential Authority (PA) cautioned against repeating the conduct that led to the non-compliance and imposed a financial penalty of R5 million.

However, R2.5 million of this penalty is conditionally suspended for 12 months from 23 August 2024.

The SARB also imposed administrative sanctions on HSBC Bank’s Johannesburg Branch for non-compliance with the FIC Act, following an inspection in 2021.

The Reserve Bank found that HSBC did not comply with a few provisions of the Financial Intelligence Centre Act.

• HSBC failed to comply with its customer due diligence obligations in that it failed to adequately conduct due diligence on sampled active customer relationships. The non-compliance included deficiencies in identifying and verifying the beneficial owners of clients.

• HSBC failed to attend to automated transaction monitoring system (ATMS) alerts within the required 48-hour period.

• HSBC failed to adequately develop, document, and implement its Risk Management and Compliance Programme (RMCP), which would effectively enable it to identify and verify clients’ beneficial owners. 

The Prudential Authority issued three cautions and a financial penalty totalling R9.5 million, of which R4 million is conditionally suspended for 36 months as of 10 June 2024.

Last month, HSBC announced that it had exited its operations in South Africa after concluding deals with FirstRand and Absa to take over its two main divisions in the country. 

The bank first opened a South African office in 1995 and sought to capture the increasing value of global trade with Africa. 

However, its stay in South Africa is not going to reach its 30th anniversary as it sells its operations to FirstRand and Absa. 

Bidvest Bank is currently up for sale and its owner, The Bidvest Group, plans to find a buyer for the bank before the end of 2024.