The South African Reserve Bank Prudential Authority (SARB PA) imposed administrative sanctions on Nedbank Limited (Nedbank) in terms of section 45 of the Financial Intelligence Centre Act (FIC Act) following a compliance inspection conducted over three years ago during May to June 2019, and less than two months after fundamental amendments to the FIC Act were required to be implemented by 2 April 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 the promulgation of the amended FIC Act had particular adverse implications for Nedbank, given the resultant extended delays in requirements definitions which impacted the timeous finalisation of system requirements having to be contended with in conjunction with Nedbank’s comprehensive information technology transformation programme that was already well underway.
Since the revised FIC Act implementation and the SARB PA inspection in 2019, Nedbank’s related compliance and risk management environment including its reporting obligations under the FIC Act has matured extensively and ongoing significant investments (including major new systems integrated with Nedbank’s Managed Evolution information technology programme roll out) have been successfully implemented to further enhance the end-toend control and compliance environments.
With regard to the administrative sanctions imposed, it is important to highlight the following:
- These sanctions were imposed purely as a result of a limited number of administrative compliance deficiencies identified in samples of data tested back in 2019, and specifically there was no evidence of Nedbank facilitating any transactions involving money laundering or the financing of terrorism.
- These administrative compliance deficiencies have all since been remediated by Nedbank, and Nedbank has cooperated fully with the SARB PA.
- A total financial penalty of R20 million was paid in April 2022 (excluding R15 million which was conditionally suspended) and this amount was covered by central provisions raised by Nedbank over time.
- 15 million (excluding R10 million conditionally suspended for 12 months) of the total R20 million financial penalty paid related to reporting gaps that had been self-identified by Nedbank and disclosed upfront to the SARB PA prior to their inspection in 2019 as a remediation programme was already underway to resolve these. These related to deficiencies in certain aspects of Nedbank’s cash threshold reporting processes following the implementation of a new financial industry-wide reporting system (“goAML”) in 2016 that resulted in the failure by Nedbank to timeously identify a number of reportable cash transactions. These have subsequently been reported in full by Nedbank.
