SARS clamps down on South African banks 

The South African Revenue Service (SARS) is willing to go to court to reiterate South African banks’ duty to report questionable transactions made by their clients.

This is according to SARS commissioner Edward Kieswetter, who told Newzroom Afrika that banks cannot plead ignorance or deniability regarding this responsibility. 

“There are laws in our Financial Intelligence Centre Act that require banks to report certain transactions if they suspect they may be questionable,” Kieswetter said.

“Banks get close enough to see the repeatability, the nature, the volume of transactions, and my message to banks would be: you cannot simply follow this from a compliance tick-the-box perspective.” 

Instead, the commissioner explained that banks must manage this duty from a “risk to the entire financial ecosystem” perspective. 

He said it is often better for these banks not to know than to find out about suspicious transactions “because then you have to take action”. 

“As a general principle, we think that this is a principle that must be tested in a court of law, and we would be happy to go all the way and proceed with the legal findings so that we create certainty by getting the courts to declare on this principle.”

The commissioner’s comments come after SARS served Sasfin Bank with a civil summons for R4.87 billion plus interest and costs in the form of a damages claim.

An Al Jazeera investigation in 2023 revealed that key officials at Absa, Standard Bank, and Sasfin Bank helped criminals launder millions of dollars of dirty cash in exchange for regular bribes.

Former foreign exchange clients at Sasfin operated as a syndicate and colluded with Sasfin employees to run an unlawful scheme to move money out of South Africa.

Therefore, SARS could not collect income tax, value-added tax and penalties allegedly owed by Sasfin’s former clients and launched this summons against the bank for R4.87 billion.

However, Sasfin argued that it is unjust for banks to be held liable to SARS for taxes that their clients have failed to pay.

“The legal opinion is unequivocal that the claim falls outside of the recognised parameters of applicable law and has a very remote likelihood of success,” the bank said. 

“On the basis of this strong legal opinion, Sasfin Holdings concluded that the claim will not result in the recognition of any liability.”

“The board of directors of Sasfin Holdings remains of the view that SARS’ claim has no merit and has little chance of success.”