Three Banks Sanctioned for Failing Anti-Money Laundering Compliance
by Kelebogile Matlou
The Prudential Authority a regulator under the South African Reserve Bank (SARB), announced administrative sanctions against HBZ Bank Limited, Citibank South Africa, and the Bank of Taiwan South Africa (BOTSA). The sanctions follow compliance inspections conducted in 2022, revealing that the banks failed to adhere to key requirements of the Financial Intelligence Centre (FIC) Act, which is essential for fighting money laundering.
Although the sanctions do not indicate criminal activity, they highlight significant deficiencies in anti-money laundering systems. The penalties include financial fines, reprimands, and formal cautions.The FIC Act requires financial institutions to identify and report suspicious transactions, maintain customer due diligence (CDD), and implement strong risk-based controls.
The Prudential Authority enforces this legislation to ensure the integrity and stability of South Africa’s financial system especially critical since South Africa was greylisted by the Financial Action Task Force (FATF) in 2023 for gaps in its anti-money laundering framework.
image: Tech Daily Post
A subsidiary of Habib Bank AG Zurich, HBZ Bank Limited was fined R9 million, with R1.5 million conditionally suspended for 24 months from 5 March 2025. The sanctions imposed include:
- Three cautions not to repeat non-compliant behaviour,
- Two formal reprimands, and
- A financial penalty.
HBZ was found to have:
- Failed to conduct proper CDD and enhanced due diligence on 23 active client files rated medium to high risk,
- Failed to maintain records of a high-risk trade finance client,
- Failed to apply proper risk rating procedures to its trade finance operations, and
- Did not fully implement its Risk Management and Compliance Programme (RMCP), especially for advance payment transactions and record-keeping.
For these failures, additional penalties include:
- R6 million fine, with R1 million conditionally suspended, for CDD failures,
- R3 million fine, with R500,000 conditionally suspended, for non-compliance with section 42 of the FIC Act.
Citibank, a global banking giant, received a financial penalty of R6 million, although the full amount has been conditionally suspended for 12 months from 5 March 2025. Its violation stemmed from failing to properly implement its RMCP concerning advance payment transactions. The Prudential Authority also issued a formal caution to prevent future violations.
BOTSA, which has been operating in South Africa since 1992, received no financial penalty but was issued administrative sanctions for several compliance failures. These included not obtaining formal approval from its Executive Committee for amendments to its Risk Management and Compliance Programme (RMCP), failing to conduct annual RMCP reviews as required by its governance policy, not implementing RMCP requirements and due diligence measures for two correspondent banking relationships, and not providing evidence that its customer and transaction screening manual had been reviewed since 2020.
image: internet
While none of the three banks were found guilty of criminal wrongdoing, the sanctions underscore South Africa’s ongoing efforts to tighten financial controls and restore international trust. Other banks recently sanctioned include Absa, Capitec, and Standard Bank, indicating growing enforcement under the FIC Act.
