THE South African Reserve Bank’s Prudential Authority (PA) has lambasted Nedbank for administrative compliance failures including failing to comply with anti-money laundering and counter-terrorism governance-related obligations.
The PA said in a statement on Friday it was imposing administrative sanctions on Nedbank and it directed the bank to take remedial action following an inspection in 2019, in terms of the Financial Intelligence Centre (FIC) Act.
A Nedbank spokesperson said the inspection had come less than two months after amendments to the FIC Act were required to be implemented by April 2, 2019.
“While Nedbank has paid the financial penalty and acknowledged the administrative shortcomings present at the time in 2019, it would like to highlight that the lengthy delays in promulgating the amended FIC Act had particular adverse implications for Nedbank -- given the extended delays in requirements definitions, which impacted finalisation of system requirements, in conjunction with Nedbank’s information technology transformation programme that was already well underway,” a Nebank spokesperson said.
“There was no evidence of Nedbank being involved in or facilitating transactions involving money laundering or the financing of terrorism,” the PA said in a statement.
The sanctions imposed included cautions, reprimands and a R35m financial penalty, of which R15m was conditionally suspended.
The PA said Nedbank had failed to comply with Risk Management and Compliance Programme obligations. It failed to apply a risk-based approach across its business clusters. It failed to apply enhanced due diligence controls and it failed to risk-rate its clients.
The bank also did not provide evidence that it had developed and documented end-to-end procedures and methods relating to its systems and processes used to onboard clients. Also it did not provide evidence that its controls and/or oversight measures were able to extract the correct data that would allow it to accurately risk-rate its clients.
Nedbank had also failed to comply with its record-keeping obligations. It failed to comply with its cash threshold reporting obligations as well and it failed to report a significant number of cash transactions that exceeded the R24 999.99 threshold. Nedbank was also unable to timeously determine when a transaction was reportable in terms of the FIC Act.
Nedbank had failed to comply with anti-money laundering and counter financing of terrorism governance-related obligations, in that it was unable to evidence that senior management approval was obtained for its customer due diligence requirements prior to implementation.
The PA said Nedbank was undertaking the remedial actions to address the identified compliance deficiencies and control weaknesses.
The Nedbank spokesperson said their compliance and risk management environment including its reporting obligations under the FIC Act had matured extensively since 2019, and ongoing investments had been successfully implemented to further enhance the end-to-end control and compliance environments.
BUSINESS REPORT