South African Reserve Bank's Prudential Authority imposes ZAR 9 million administrative sanctions on HBZ Bank for Financial Intelligence Centre Act breaches

The South African Reserve Bank’s Prudential Authority (PA) imposed administrative sanctions on HBZ Bank Limited after identifying non-compliance with provisions of the Financial Intelligence Centre Act 38 of 2001 (FIC Act) during a 2022 inspection conducted under section 45B. The sanction package comprises three cautions not to repeat the conduct, two reprimands and a ZAR 9 million financial penalty, of which ZAR 1.5 million is conditionally suspended for 24 months from 5 March 2025. The PA found that HBZ did not adequately perform customer due diligence and enhanced due diligence under sections 21(1) and 21A on 18 active medium-risk client files and five active high-risk client files, resulting in a caution and a ZAR 6 million penalty (ZAR 1 million suspended for 24 months). It also identified record-keeping failures under sections 22 and 23 relating to one high-risk trade finance relationship, leading to a caution and a reprimand. In addition, under section 42, HBZ was found to have weaknesses in documenting and evidencing its risk assessment approach for trade finance and in implementing its Risk Management and Compliance Programme (RMCP), including for seven advance payment transactions and for CDD and record-keeping obligations, resulting in a caution, a reprimand and a ZAR 3 million penalty (ZAR 500,000 suspended for 24 months). The PA noted that HBZ cooperated with the inspection process and that the bank has undertaken remedial actions to address the identified compliance deficiencies and control weaknesses.