The Prudential Authority of the South African Reserve Bank announced on 4 October 2024 administrative sanctions on HSBC Bank Plc's Johannesburg Branch, following an inspection conducted in 2021 that identified non-compliance with the Financial Intelligence Centre Act 38 of 2001. The sanctions comprise three cautions and a financial penalty totalling R9.5 million, of which R4 million is conditionally suspended for 36 months from 10 June 2024.
HSBC Bank Plc's Johannesburg Branch operates as a foreign bank branch within South Africa's regulated financial sector. The PA's action against the branch formed part of a broader announcement on 4 October 2024 in which the regulator simultaneously published sanctions against Bidvest Bank Limited for separate FIC Act breaches.
FINDINGS FROM THE 2021 INSPECTION
The Prudential Authority conducted its inspection of the HSBC Johannesburg Branch in 2021 under the framework established by the FIC Act, which mandates that accountable institutions maintain anti-money-laundering and counter-financing-of-terrorism controls.
The three cautions correspond to the three areas of non-compliance the PA identified: customer due diligence failures, including verification of beneficial owners (R5 million, of which R2.5 million suspended); failure to attend to transaction-monitoring alerts within the required 48-hour period under Directive 5 of 2019 (R1.5 million); and an inadequately developed Risk Management and Compliance Programme (R3 million, of which R1.5 million suspended).
REGULATORY CONTEXT
The Financial Action Task Force grey-listed South Africa in early 2023. The FATF assessment found deficiencies in South Africa's implementation of AML and CFT standards.