Major global bank hit with sanctions in South Africa

The South African Reserve Bank (SARB) imposed administrative sanctions on the Bank of China’s Johannesburg branch for numerous offences.

The Bank of China is a Chinese majority communist-owned commercial bank headquartered in Beijing. It is one of the largest banks in the world.

It has branches and subsidiaries worldwide, including in the United States, Australia, Canada, the United Kingdom, Germany, Singapore, and South Africa.

The Bank of China was the first Chinese bank to have a presence in South Africa. It opened its Johannesburg Branch, located in Sandton, in October 2000.

Last week, the South African Reserve Bank announced that it had imposed administrative sanctions on Bank of China’s Johannesburg Branch.

These sanctions resulted from non-compliance with the Financial Intelligence Centre Act (FICA) provisions.

The SARB conducted a FICA inspection in 2021, including sampling data from 2016 to 2020.

It found numerous irregularities and failure to comply with provisions of the FICA and Financial Intelligence Centre Directive 5 of 2019.

The Reserve Bank’s sanctions consist of four cautions, a reprimand, and a total financial penalty of R30.5 million.

“An amount of R15.25 million is conditionally suspended for 36 months as of 19 March 2024,” the Reserve Bank said.

The SARB said the Bank of China failed to comply with its customer due diligence obligations in South Africa.

“It failed to conduct customer due diligence and enhanced due diligence on sampled customer relationships,” it explained.

The Prudential Authority (PA) cautioned against repeating the conduct, which resulted in non-compliance and a financial penalty of R20 million.

The bank also failed to report suspicious transactions and activities to the Financial Intelligence Centre in a timely manner.

It failed to timeously attend to its automated transaction monitoring system alerts within the required 48-hour. 

The Reserve Bank also found that the Bank of China’s Johannesburg branch failed to:

  • Adequately develop and document its risk management and compliance programme (RMCP) in relation to dormant accounts.
  • Adequately develop and document risk rating factors and methodology.
  • Adequately implement its RMCP in relation to its CDD & STR obligations.
  • Properly identify, assess, monitor, mitigate and manage its risks.
  • Ensure that its RMCP is customised and approved by its board of directors.

The PA imposed a caution not to repeat the conduct, which led to the non-compliance and a financial penalty of R10 million.

The SARB said the Bank of China undertook remedial action to address the identified compliance deficiencies and control weaknesses. 


Top JSE indices