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Banking News

The South African Reserve Bank has imposed significant administrative sanctions on the Bank of China’s Johannesburg branch for failing to comply with the Financial Intelligence Centre Act (FICA).

The Bank of China is one of the largest state-owned commercial banks in the world.

They have a global presence, including a branch in Joburg that opened back in 2000. An inspection conducted by the South African Reserve Bank (SARB) in 2021, which reviewed data from 2016 to 2020, revealed numerous compliance violations. As a result, the SARB has hit the bank with various sanctions and fines.

What They Were Not Doing

The violations identified by the SARB include the Bank of China’s failure to conduct proper customer due diligence and enhanced due diligence on sampled customer relationships.

Also, the bank failed to report suspicious transactions and activities to the Financial Intelligence Centre (FIC) promptly and did not address automated transaction monitoring system alerts within the required 48-hour timeframe. These failures contributed to the SARB’s decision to impose sanctions on the Joburg branch.

‘the bank failed to report suspicious transactions and activities to the Financial Intelligence Centre’

The administrative sanctions imposed by the SARB consist of four cautions, a reprimand, and a financial penalty totalling R30.5 million (with R15.25 million conditionally suspended for 36 months starting from March 2024).

The SARB highlighted that the bank’s shortcomings also included inadequately developing and documenting its risk management and compliance program (RMCP), properly identifying and managing risks, and ensuring that its RMCP was approved by its board of directors.

They Will Fix Things Up ASAP

In response to the various sanctions, the Bank of China has undertaken remedial actions to address the compliance deficiencies and control weaknesses that were identified in the investigation.

These efforts by the bank are aimed at ensuring future compliance with FICA provisions (which will mean no future fines) and at the same time they say it will also improve the overall effectiveness of their risk management and compliance programs which is what these steps are designed to accomplish.

Picture: Bank of China HQ in Beijing - Wiki Commons