The South African Reserve Bank (SARB) this month announced it has imposed an effective fine of some R15 million on a branch of the Bank of China (BOC) following a FICA compliance inspection conducted three years ago.
The state-owned BOC, headquartered in Beijing, is one of the largest commercial banks in the world. It has branches and subsidiaries around the world. The BOC was the first Chinese bank to have a presence in South Africa. It opened its Johannesburg branch in October 2000.
The Prudential Authority (PA), operating within the administration of the SARB, is mandated to supervise and enforce compliance by accountable institutions with the provisions of the Financial Intelligence Centre Act (FICA).
The PA conducted an inspection of the BOC’s Johannesburg branch in 2021 and assessed data sampled from 2016 to 2020, the SARB said in a statement.
The inspection found that BOC’s Johannesburg branch failed to comply with certain provisions of FICA and Directive 5 of 2019.
The resultant sanctions consisted of four cautions, a reprimand, and a total fine of R30.5m, of which R15.25m was conditionally suspended for 36 months from 19 March 2024.
BOC Jhb was neither involved in nor did it facilitate any transactions relating to money laundering or the financing of terrorism, the SARB said.
The PA’s inspection identified the following areas of non-compliance:
- BOC Jhb failed to conduct customer due diligence (CDD) and enhanced due diligence on the sampled customer relationships, as required by sections 21(1) and 21A of FICA.
The PA cautioned BOC Jhb not to repeat the conduct that led to the non-compliance and a financial penalty of R20m, of which R10m was conditionally suspended for 36 months.
- BOC Jhb failed timeously to report suspicious transactions and/or activities to the Financial Intelligence Centre (FIC), as required by section 29 read with regulation 24(3).
The PA imposed a caution not to repeat the conduct that led to the non-compliance and a reprimand.
- BOC Jhb failed to comply with the FIC’s Directive 5 of 2019, in that it failed timeously to attend to its automated transaction monitoring system alerts within the required 48-hour period.
The PA imposed a caution not to repeat the conduct that led to the non-compliance and a fine of R500 000, of which R250 000 was conditionally suspended for 36 months.
- BOC Jhb failed to comply with section 42 of FICA because it did not:
- 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 and Suspicious and Unusual Transaction Reporting obligations;
- properly identify, assess, monitor, mitigate, and/or manage its risks; and
- ensure that its RMCP was customised and approved by its board of directors.
The PA imposed a caution not to repeat the conduct that led to the non-compliance and a fine of R10m, of which R5m was conditionally suspended for 36 months.
“BOC Jhb co-operated with the PA and undertook the necessary remedial action to address the identified compliance deficiencies and control weaknesses,” the SARB said.
