The Prudential Authority (PA) has imposed administrative sanctions on the Johannesburg branch of HSBC Bank for non-compliance with aspects of the Financial Intelligence Centre Act.
The Prudential Authority, which is formerly known as the Office of the Registrar of Banks, operates within the South African Reserve Bank (SARB).
The administrative sanctions were imposed because certain weaknesses were identified in HSBC's processes, which inhibited HSBC from proactively detecting potential money laundering and the financing of terrorism.
It should be noted that the administrative sanctions were not imposed because HSBC was found to have facilitated transactions involving money laundering or the financing of terrorism, the SARB said in a statement.
According to the SARB, FIC Act mandates the PA, in terms of section 45, to supervise and enforce compliance with the provisions of the act insofar as accountable institutions (regulated or supervised by it) are concerned.
Flowing from these responsibilities, the PA inspects institutions to assess whether they have appropriate and adequate measures and controls in place, which would enable them to effectively comply with FIC Act.
In respect of the failure to formulate and implement adequate processes and working methods, as per section 42(1)(d) of FIC Act, read with regulation 27 of the Regulations relating to Banks, which would enable HSBC to detect and report suspicious and unusual transactions in terms of section 29 of FIC Act, the administrative sanctions imposed on HSBC are as follows:
A directive to take remedial action in terms of section 45C(3)(c) of the FIC Act to be implemented in accordance with the stipulated timelines; and
A financial penalty of R15 million, of which R7.5 million is suspended in terms of section 45C(4)(c) of the FIC Act for a period of three years, subject to HSBC adhering to certain conditions.
HSBC has said it is cooperating with the PA and has taken the necessary measures to address the identified compliance deficiencies and control weaknesses.
Source: South African Government News Agency