SARB hits Deutsche Bank with a R10m fine

2015-02-23 15:00

The SA Reserve Bank (SARB) has slapped the Johannesburg branch of global financial services provider Deutsche Bank with a hefty fine for failing to put adequate controls in place to counter money laundering and terrorism financing.

Although the R10?million fine does not mean that Deutsche Bank facilitated transactions meant to launder money or finance terrorism, SARB inspectors found weaknesses in the bank’s compliance with sections of the Financial Intelligence Centre Act (Fica) related to the controls needed to counter these crimes.

These weaknesses, which include identifying and verifying customer details, were discovered during a routine inspection in February 2014.

The Fica prerequisites, also known as the “know your customer” requirement, is something South Africans are familiar with.

It requires bank clients to produce an identity document and proof of residence as part of control measures to combat money laundering and terrorist financing.

Deutsche Bank’s controls and systems relating to the detection of assets associated with terrorists and related activities failed.

Spokesperson Samantha Forbes confirmed the fine.

“Deutsche Bank AG acknowledges these inconsistencies and, in consultation with the SARB, it has cooperated fully in remediating the identified shortcomings within agreed time frames,” she said.

Forbes declined to answer further questions.

The SARB’s crackdown follows evidence of malfeasance in the global banking sector. Leaks of sensitive information from the Swiss arm of HSBC showed that 100?000 clients from more than 200 countries had billions stashed in secret accounts.

Of these clients, 1?787 were South African and had deposits worth about $2?billion (R23.4?billion) in 2006/07, according to information published by the International Consortium of Investigative Journalists.

The raw data were compiled by Hervé Falciani, a former HSBC employee who claims many of these clients used the accounts to avoid tax.

The SA Revenue Service last week said it had information that some South African HSBC account holders had used their accounts to avoid paying tax; and HSBC took out full-page adverts in two British newspapers to apologise for the scandal and offer its version of events.

The bank is being investigated in five countries.

Speaking to Vice News earlier this week, Falciani said people should brace themselves for further revelations.

“HSBC does not work in isolation, even though it’s a giant with the world’s biggest intranet. It doesn’t work alone. It collaborates with several other banks,” he said.

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