The Prudential Authority is responsible for inspections at accountable institutions to ensure they adhere to Fica.
The Prudential Authority has fined Discovery Bank R3 million for Fica violations after an inspection showed that the bank was not complying with certain sections that requires it to, for example, report suspicious or unusual transactions.
According to a statement from the Prudential Authority it is mandated to supervise and enforce compliance by accountable institutions with the provisions of the Financial Intelligence Centre Act (Fica) and with any order, determination or directive made in terms of the Act.
The Prudential Authority imposed administrative sanctions on Discovery Bank due to its non-compliance with certain provisions of Fica after an inspection conducted at Discovery Bank in 2021 in terms of section 45B of Fica.
The administrative sanctions imposed on Discovery Bank consist of four cautions not to repeat the conduct which led to the non-compliance and a financial penalty totalling R3 million. However, R1 million is conditionally suspended for 36 months from 9 July 2025.
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This is what the Prudential Authority found at Discovery Bank
These administrative sanctions stem from Discovery Bank:
- failing to comply with section 29, read with section 42 of Fica and Regulation 24(3) of the Fica Regulations, by not timeously submitting 24 suspicious and unusual transaction reports or suspicious and unusual activity reports to the Financial Intelligence Centre.
The Prudential Authority imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R1 million, of which R500 000 is conditionally suspended for 36 months.
- failing to comply with section 43 of Fica because it did not provide training as prescribed by its Risk Management and Compliance Programme (RMCP), with 84 out of 155 of its new employees not receiving training within 30 days of being appointed, 47 out of 109 of its employees receiving annual refresher training within a period of a year and 2 out of 6 of its senior management not receiving training within 30 days of being appointed.
The Prudential Authority imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R1 million.
- failing to comply with Fica Directive 5/2019 because it did not timeously deal with 2 281 of its automated transaction monitoring system alerts within the prescribed period of 48 hours.
The Prudential Authority imposed a caution not to repeat the conduct that led to the non-compliance and a financial penalty of R1 million. R500 000 is conditionally suspended for 36 months.
- failing to comply with section 42 of Fica because it did not provide evidence that it documented the step-by-step working method/s and/or listed the trigger events that would require the bank to review its RMCP and aligning its RMCP to define a business day for the purposes of identifying cash transactions to be reported in terms of section 28 read with section 42 of Fica.
The Prudential Authority imposed a caution not to repeat the conduct which led to the non-compliance.
According to the Prudential Authority, Discovery Bank cooperated with the Authority to undertake the remedial action required to address the identified compliance deficiencies and control weaknesses.
Discovery Bank acknowledges prudential Authority’s sanction
Meanwhile Discovery Bank said in a statement that it is fully committed to upholding the highest standards of regulatory compliance and transparency at all times and acknowledges the Prudential Authority’s administrative sanction.
The bank says the inspection, which covered the period from 1 July 2019 to 31 May 2021, identified non-compliance with certain administrative provisions of Fica, in particular, related to training and transaction reporting timeframes.
However, the bank points out that it is important to note that the inspection found no evidence of Discovery Bank being involved in or facilitating transactions related to money laundering or other illicit financial activities.
“It is also important to note that all the Prudential Authority’s findings had already been identified and remediated before the inspection started. Discovery Bank takes its regulatory obligations extremely seriously.
“Since the inspection period, compliance operations have been significantly strengthened, with substantive enhancements across systems, processes and governance structures. The publication of the sanction notice brings this matter to a close,” Discovery Ban said in the statement.
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