The South African Reserve Bank (SARB) this month announced it has imposed an effective fine of R7 million on Safrican Insurance Company following a FICA compliance inspection conducted four years ago.
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 administrative sanctions imposed on Safrican resulted from its failure to comply with certain provisions of FICA. They consist of three cautions and a total financial penalty of R13m, of which R6m was conditionally suspended for 36 months from 10 June 2024.
Safrican 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:
1. Safrican failed to comply with its customer due diligence obligations in terms of sections 21(1) and/or 21A to 21H of FICA because it did not adequately conduct customer due diligence and enhanced due diligence on sampled active customer relationships, including domestic prominent influential persons.
The PA imposed a caution not to repeat the conduct that led to the non-compliance and a financial penalty of R10m, of which R5m was conditionally suspended for 36 months.
2. Safrican failed to comply with its record-keeping obligations in terms of sections 22 and/or 23 of FICA because it did not keep records of the sampled client files. The PA imposed a caution not to repeat the conduct that led to the non-compliance.
3. Safrican failed to comply with section 42 of FICA because it did not adequately develop and implement its Risk Management and Compliance Programme, including:
• an inadequate reflection on the identification and assessment of risk linked to the risk-rating matrix;
• the failure to evidence that a documented methodology and/or step-by-step working method was applied to identify and assess money laundering and terrorist financing (ML/TF) risks; and
• the failure sufficiently to consider risk factors such as client ML/TF risk, geographical risk, product risk, delivery channel risk, and anti-money laundering and combating the financing of terrorism (AML/CFT) information technology, and AML/CFT risks linked to the systems utilised.
The PA imposed a caution not to repeat the conduct that led to the non-compliance and a financial penalty of R3m, of which R1m was conditionally suspended for 36 months.
Safrican co-operated with the PA and has since remedied the identified compliance deficiencies and control weaknesses, the SARB said.
