South African Banks Fined After Money-Laundering ProbeRenee Bonorchis
South Africa’s central bank fined the country’s four largest lenders a total of 125 million rand ($11.9 million) after finding deficiencies in their controls to combat money laundering and terrorist financing.
The penalties for FirstRand Ltd., Nedbank Group Ltd. and Barclays Plc’s South African unit were 30 million rand, 25 million rand and 10 million rand respectively, the Pretoria-based South African Reserve Bank said in a statement today. The biggest penalty of 60 million rand was imposed on Standard Bank Group Ltd., which was also fined by a U.K. regulator earlier this year.
While verifying customer details, maintaining records and managing and processing suspicious transactions were three deficiencies identified, the central bank said the fines don’t indicate the banks facilitated transactions involving money laundering and terrorist financing. Nedbank and Standard Bank also need better controls for detecting property associated with terrorists, the regulator said.
“It’s concerning the banks weren’t complying,” Tracy Brodziak, a banking analyst at Old Mutual Investment Group, said in a phone interview from Cape Town. “I don’t think it was intentional, but there were issues and the banks need to tighten up and make sure this doesn’t happen again.”
The seven-member FTSE/JSE Africa Banks Index rose 0.5 percent by the close of trading in Johannesburg, led by 0.7 percent gain in Barclays Africa shares.
Standard Bank and Barclays’s Absa said they have taken steps to address the weaknesses identified by the central bank, while Nedbank said it has prepared a plan of remedial action. FirstRand said it was committed to resolving outstanding weaknesses, including anti-money laundering monitoring.
“The danger of not fulfilling compliance measures can open the door to criminals abusing our institutions,” Murray Michell, director of South Africa’s Financial Intelligence Centre, said in a separate statement.
The U.K. Financial Conduct Authority imposed a 7.6 million-pound ($12.8 million) penalty in January on Standard Bank after saying its London-based unit didn’t have adequate policies or procedures to protect corporate customers connected to political figures in relation to anti-money laundering.