Habib Overseas Bank is among seven banks fined by the South African Reserve Bank in 2016 for failure to comply with provisions of the Financial Intelligence Centre (FIC) Act.
The Act, which came in to effect in July 2003, was introduced to combat financial crime such as money laundering, tax evasion and the financing of terrorist activities.
The South African Reserve Bank’s Bank Supervision Department, which imposed the sanctions totalling R46.5 million, maintained that none of the institutions fined had facilitated transactions relating to money laundering and/or the financing of terrorism.
“Administrative sanctions were imposed not because banks had been found to have facilitated transactions involving money-laundering and/or the financing of terrorism, but because of weaknesses in their control measures,” it said in an annual report.
Habib Overseas Bank was fined R1 million for “inadequate controls and working methods pertaining to the reporting of suspicious and unusual transactions”. It was also directed to take remedial action.
The bank’s local unit featured in headlines in March when Vardospan, the company attempting to buy 99.9% of the bank, made an urgent application to the high court to force the Reserve Bank, the registrar of banks and the then finance minister Pravin Gordhan to decide whether the deal could go ahead.
Salim Essa, a shareholder in Vardospan, is reportedly linked to the Gupta family.
Vardospan, in court papers, accused the regulatory authorities of dragging out the sale an approval of the bank. It failed to get its high court application heard on an urgent basis. The bank continues to be owned by Luxembourg-based Pitcairns Finance.
A financial report for the year-ended December 31, 2016, showed that the local unit held R1.13 billion in assets. It reported R12.56 million profit for the year.
Of the banks fined, Investec Bank notched the highest penalty of R20 million for failing to implement adequate processes with respect to the sanctions screening of related parties to customers.
Absa Bank and Standard Chartered’s Johannesburg Branch were fined R10 million each. The former was charged for weaknesses related to transaction monitoring and the latter for not verifying Know Your Customer (KYC) requirements and for failure to report certain cash transactions above R24 999.99.
GBS Mutual Bank, Société Générale and the South African Bank of Athens were also fined between R500 000 and R3 million.
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