Standard Bank hit with R17m in financial penalties over compliance failures

R5 million has been suspended, leaving the lender with penalties worth R12 million. The Prudential Authority (PA) has slapped Standard Bank with R17 million in financial penalties after an inspection uncovered several compliance failures, including inadequate customer checks, missing client records, and gaps in anti-money laundering training. However, R5 million has been suspended, leaving the lender with penalties worth R12 million. PA is a regulatory body within the administration of the South African Reserve Bank (Sarb) responsible for promoting the safety and soundness of financial institutions. The organisation is mandated to supervise and enforce compliance by accountable institutions with the provisions of the Financial Intelligence Centre Act 38 of 2001 (FIC Act), and with any order, determination or directive made in terms thereof. Standard Bank fined for non-compliance The PA on Friday evening said it has imposed administrative sanctions on Standard Bank for its non-compliance with certain provisions of the FIC Act, following an inspection conducted on SBSA in 2023 in terms of section 45B of the FIC Act. “The administrative sanctions imposed on Standard Bank comprise three cautions not to repeat the conduct that led to the non-compliance, three reprimands and a financial penalty totalling R17 million, of which R5 million is conditionally suspended for a period of 36 months as from 19 May 2026,” said the PA. First non-compliance by Standard Bank The lender was found guilty of failing to comply with sections 21(1) and 21A, read with section 42 and its Risk Management and Compliance Programme. “It failed to adequately conduct customer due diligence on 34% of the sampled money or value transfer services (MVTS) client files,” the PA said. “The PA imposed a caution not to repeat the conduct that led to the non-compliance, a reprimand and a financial penalty of R7 million, of which R2 million is conditionally suspended for a period of 36 months.” R5m sanction The PA fined Standard Bank R5 million for failing to keep records of proof of address and/or work permits for 52% of the sampled MVTS client files. This failure is a violation of sections 22 to 24 of the FIC Act. “The PA imposed a caution not to repeat the conduct that led to the non-compliance, a reprimand and a financial penalty of R5 million, of which R1 million is conditionally suspended for a period of 36 months.” Failure to comply with section 43 The PA said the lender failed to comply with section 43 of the FIC Act. “52% of the sampled MVTS employees appointed in 2021 did not receive anti-money laundering and counter-financing of terrorism (AML/CFT) refresher training in 2022 and 2023. “37% of the sampled MVTS employees appointed in 2023 did not receive AML/CFT induction training. “The PA imposed a caution not to repeat the conduct that led to the non-compliance, a reprimand and a financial penalty of R5 million, of which R2 million is conditionally suspended for a period of 36 months.” The PA noted that the lender has cooperated with the PA to undertake the remedial action required to address the identified compliance deficiencies and control weaknesses. No money laundering identified Standard Bank has acknowledged the PA’s administrative sanctions. The lender noted that the findings did not identify instances of money laundering, terrorist financing, or proliferation financing, nor did they find that Standard Bank facilitated such activity. “The sanctions relate to deficiencies in the application of, and evidence supporting, certain regulatory controls within the retail partner environment. “Standard Bank takes its obligations under the FIC Act, and its broader responsibility to combat financial crime, extremely seriously. The Bank cooperated fully with the Prudential Authority throughout the supervisory process and has implemented remedial measures to address the identified deficiencies and strengthen the relevant controls.” Strengthening oversight “Standard Bank recognises the importance of maintaining robust AML/CFT controls across all products and channels, including those designed to broaden access to formal financial services,” the lender said. “The Bank remains committed to ensuring that financial inclusion is supported by effective risk management and appropriate regulatory controls. “The Bank continues to strengthen its oversight, governance and assurance mechanisms across the platforms through which its services are made available to customers. Standard Bank remains committed to constructive engagement with its Regulators, maintaining high standards of regulatory compliance and transparency, and continuously strengthening the effectiveness and sustainability of its financial crime risk management framework.”