Major South African bank hit with a huge fine
In 2024, banks across the world – including one bank from South Africa – paid over R80 billion in fines.
Finbold’s Bank Fines Report for 2024 recently revealed the list of banks that received the biggest fines during the year.
Regulators imposed fines for breaches of various protocols, such as Anti-Money Laundering (AML), violation of Know Your Customer (KYC) and operating guidelines, and personal data leaks.
The report revealed that in 2024, banks paid an aggregate of $4.5 billion (R82.07), with the most common violation being AML breaches.
The United States had the most bank fines, with 19 fines being imposed during the year, contributing $4.08 billion (R74.32 billion) in fines, 90.67% of the total fines paid.
It also had the largest fine, which was issued to TD Bank (Toronto-Dominion Bank) in October, coming in at a notable $3.09 billion (R56.28 billion).
This was imposed due to a multi-agency investigation into improper controls that enabled the corporation’s American subsidiary to launder illicit funds. It accounts for 68.67% of all 2024 fines in the sector.
The bank that paid the second-largest fine of $348.20 million (R6.34 billion) – JPMorgan Chase & Co – was penalised for “an inadequate program to monitor firm and client trading activities for market misconduct”.
Interestingly, the relevant violation was ongoing for nearly a decade, from 2014 to 2023. The fine was announced on 13 March 2024.
In fact, the top five biggest fines all came from the United States, with Citigroup, Navy Federal Credit Union, and USAA Federal Savings Bank following behind.
However, though the fine sizes in 2024 have been lopsided with the US in a clear lead, watchdogs across the globe have been active.
“While the US has levied an outsized proportion of the total value of penalties, the share of individual fines imposed in the country – 33% with 19 out of the total 57 fines recorded – is more appropriate, possibly even downscaled given the fact the country is home to more than 4,000 banks,” Andreja Stojanovic, a co-author of the report, pointed out.
It should also be noted that since these fines are imposed by regulators within the countries themselves, a high ranking could also point to better enforcement rather than the fact that said country has a “worse” banking system.
On top of that, countries with stronger currencies are also likely to rank higher in terms of the amount of the fees themselves.
HSBC Bank in the United Kingdom and Klarna Bank AB in Sweden were the only non-US banks which ranked among the top 10 highest fines for the year.
In January 2024, the UK’s Prudential Regulation Authority fined HSBC Bank $74.12 million (R1.35 billion) for failing to implement depositor protection.
In the last months of the year, Sweden penalized Klarna Bank AB for AML violations to the tune of $46 million (R837.92 million).
Klarna is set to conduct its initial public offering in 2025 and is expected to remedy its AML situation.
However, Erik Blommé, the Director of Sweden’s Money Laundry Supervision, highlighted that the ruling was not an injunction and, therefore, there is no clear timetable.
The United Kingdom was the country with the second highest number of fines, levying the payment of $261.68 million (R4.77 billion) across 10 fines.
An interesting outlier in the statistics has been China, the report found.
Despite having the world’s second-largest economy by nominal gross domestic product (GDP), it imposed only three fines in 2024 and, levying a total of $31.22 million (R568.79 million), came in behind both Sweden and Finland in terms of the total penalty amount.
The table below shows the total bank fines per country, ranked from highest to lowest.
| Rank | Country | Amount | Fine Count |
|---|---|---|---|
| 1 | United States | $4.08 billion | 19 |
| 2 | United Kingdom | $261.68 million | 10 |
| 3 | Sweden | $47.40 million | 2 |
| 4 | Finland | $35.99 million | 1 |
| 5 | China | $31.22 million | 3 |
| 6 | Australia | $20.51 million | 4 |
| 7 | Belgium | $11.24 million | 1 |
| 8 | Germany | $9.94 million | 1 |
| 9 | Canada | $8.14 million | 2 |
| 10 | Spain | $6.70 million | 2 |
| 11 | France | $3.84 million | 1 |
| 12 | Denmark | $3.47 million | 1 |
| 13 | Netherlands | $3.22 million | 1 |
| 14 | South Africa | $3.04 million | 1 |
| 15 | Austria | $2.24 million | 1 |
| 16 | Japan | $1.75 million | 1 |
| 17 | New Zealand | $1.50 million | 1 |
| 18 | Italy | $1.08 million | 1 |
| 19 | Poland | $1.03 million | 1 |
| 20 | Switzerland | $870,000 | 1 |
| 21 | India | $630,000 | 1 |
| 22 | Hong Kong | $510,000 | 1 |
The table below shows the top 10 highest fines imposed on banks during 2024.
| Rank | Country | Bank | Fine |
|---|---|---|---|
| 1 | United States | TD Bank (Toronto-Dominion Bank) | $3.09 billion |
| 2 | United States | JPMorgan Chase & Co | $348.20 million |
| 3 | United States | Citigroup | $135.60 million |
| 4 | United States | Navy Federal Credit Union | $95.00 million |
| 5 | United States | USAA Federal Savings Bank | $85.00 million |
| 6 | United Kingdom | HSBC Bank plc | $74.12 million |
| 7 | United States | City National Bank | $65.00 million |
| 8 | United States | Goldman Sachs | $64.80 million |
| 9 | Sweden | Klarna Bank AB | $46.00 million |
| 10 | United States | Green Dot Corporation | $44.00 million |
South Africa
South Africa ranked as the country with the 14th highest bank fines for the year, with only one fee imposed in 2024.
The South African Reserve Bank (SARB) imposed a R56.25 million administrative sanction against Capitec in December 2024.
The SARB explained that this fine was imposed because the bank failed to comply with certain provisions of the Financial Intelligence Centre Act (FIC Act).
This followed inspections conducted on Capitec in 2021 and 2022. The inspection in 2021 focused on the retail banking segment, and the 2022 inspection focused on the business banking segment.
“The administrative sanctions imposed on Capitec Bank are due to its failure to comply with certain provisions of the FIC Act.”
“The sanctions consist of seven cautions, one reprimand and a financial penalty totalling R56.25 million, of which R10.5 million is conditionally suspended for a period of 36 months as from 30 July 2024.”
The bank failed to conduct proper customer due diligence, including:
- Verifying client identities
- Identification of the beneficial owners of legal entities
- Obtaining and/or verification of the address and source of funds
- Conducting PEP screening and ongoing due diligence, including annual reviews for high-risk clients
- Obtaining senior management approval when re-risk rating clients or pertaining to reviews of high-risk clients
As a result, the Prudential Authority (PA) imposed a R20 million penalty on its retail banking segment, with R5 million suspended for 36 months, and a R15 million penalty on its business banking segment, with R2 million suspended.
Capitec also failed to report large cash transactions (Cash Threshold Reports or CTRs) to the FIC on time, leading to a R2 million penalty, with R1 million suspended for 36 months.
The bank further delayed submitting Suspicious Transaction Reports (STRs) and Suspicious Activity Reports (SARs), resulting in a R5 million fine.
Additionally, it failed to respond to Automated Transaction Monitoring System alerts within the required 48-hour period, incurring a R3 million penalty.
Further non-compliance was found in Capitec’s Risk Management and Compliance Programme (RMCP), where it did not properly assess or mitigate risks related to CTRs and STRs, failed to implement enhanced due diligence, and neglected to secure board approvals for key RMCP decisions.
The bank also overlooked important risk factors during client onboarding. For these failures, Capitec was fined R8 million (R2 million suspended) for its retail banking segment and R3.25 million (R500,000 suspended) for its business banking segment.
Despite these penalties, the PA confirmed that Capitec cooperated with authorities and has taken corrective measures to address its compliance shortcomings.
Comments