The Prudential Authority (PA), an entity of the South African Reserve Bank tasked with monitoring banks, has fined Capitec Bank R56 million for failing to comply with some provisions of the Financial Intelligence Centre Act (FICA), mainly enacted to prevent money laundering.

The PA accused the bank of failing to comply with certain provisions of the FIC Act 38 of 2001.

The fine was announced on Friday last week through a press statement. 

“The sanctions consist of seven cautions, one reprimand and a financial penalty totalling R56.25 million, of which R10.5 million is conditionally suspended for a period of 36 months as from 30 July 2024,” the Prudential Authority said. 

The fines stem from inspections conducted in 2021 which focused on the retail bank segment and a 2022 inspection which focused on the business banking segment of Capitec Bank.

The Prudential Authority said Capitec failed to fully comply with sections 21(1) and/or 21A to 21H of the FIC Act in that it did not adequately conduct customer due diligence, enhanced due diligence and ongoing due diligence in respect of the sampled client files. 

“Aspects of non-compliance inter alia included deficiencies concerning the following: verification of the identity of client; identification of the beneficial owners of legal entities; obtaining and/or verification of the address and source of funds; conducting PEP screening and ongoing due diligence including annual reviews for high-risk clients; and obtaining senior management approval when re-risk rating clients or pertaining to reviews of high-risk clients,” the authority added. 

The PA said Capitec cooperated during the inspection and has undertaken the necessary remedial action to address the identified compliance deficiencies and control weaknesses. 

The bank has not issued any statement about the fine.