The South African Reserve Bank (SARB) last week announced it has imposed administrative sanctions on Bidvest Bank and HSBC Bank Plc for non-compliance with the Financial Intelligence Centre Act (FICA).
The sanctions on British multinational bank HSBC’s Johannesburg branch include a fine of R9.5 million, of which R4m was conditionally suspended. Bidvest was fined R5m, half of which was conditionally suspended, the SARB said in statements on Friday.
Bidvest Bank is a subsidiary of the Bidvest Group, which reported an after-tax profit of R6.3 billion in the year to the end of June 2023. London-headquartered HSBC posted an after-tax profit of $24.5bn (about R429bn) in the year to the end of December 2023.
The non-compliance at Bidvest was discovered by the Prudential Authority (PA) during a routine inspection conducted in 2022.
The PA, operating within the administration of the SARB, is mandated to supervise and enforce compliance by accountable institutions with the provisions of FICA.
The SARB said the PA found that Bidvest was non-compliant with section 42 of FICA because it failed to implement its Risk Management and Compliance Programme (RMCP) to the assessed trade-based transactions.
The PA cautioned Bidvest not to repeat the conduct that led to the non-compliance and imposed a fine of R5m, of which R2.5m is conditionally suspended for 12 months from 23 August 2024.
The PA discovered HSBC’s transgressions of FICA during an inspection in 2021.
The SARB said the inspection identified the following areas of non-compliance:
- HSBC failed to comply with its customer due diligence (CDD) obligations in terms of sections 21(1) and/or sections 21A to 21H of FICA because it did not adequately conduct CDD on the sampled active customer relationships. The non-compliance included deficiencies in the identification and verification of the beneficial owners of clients.
- The PA cautioned HSBC not to repeat the conduct that led to the non-compliance and a fine of R5m, of which R2.5m is conditionally suspended for 36 months from 10 June 2024.
- HSBC did not comply with Directive 5 of 2019 because it failed to attend to automated transaction monitoring system alerts within the required 48-hour period.
- The PA cautioned HSBC not to repeat the conduct that led to the non-compliance and a fine of R1.5m.
- HSBC did not adequately develop, document, and/or implement its RMCP that would effectively enable it to identify and verify the beneficial owners of clients.
- The bank was cautioned not to repeat the conduct that led to the non-compliance and fined R3m, of which R1.5m is conditionally suspended for 36 months.
- HSBC, which has had a presence in South Africa since 1995, announced last month that would the leave the country.
- The bank will transfer its clients and assets and liabilities to FirstRand and Absa. Its branch employees will be transferred to FirstRand. The deal is expected to be concluded in the last quarter of 2025.
