Capitec Bank and Ninety-One Assurance have been hit with a combined R34 million in administrative penalties after the Prudential Authority identified weaknesses in their compliance with South Africa’s financial crime prevention laws.
Capitec received the larger penalty of R28 million, while Ninety-One was fined R6 million. Portions of both penalties have been conditionally suspended for 36 months, subject to compliance requirements.
The penalties follow inspections conducted by the Prudential Authority in 2023 and highlight the growing regulatory and financial risks facing institutions that fail to maintain adequate systems to detect and prevent financial crime.
For Capitec, the regulator identified shortcomings in customer due diligence, enhanced due diligence and ongoing monitoring of selected client files. The bank was also found to have gaps in employee training.
The Prudential Authority further raised concerns about Capitec’s risk-management and compliance programme, particularly processes relating to the reporting of terrorist property and compliance with financial sanctions.
Ninety-One was also found to have weaknesses in its risk-management and compliance programme, including shortcomings in sanctions screening and the screening of prominent influential persons.
Of Capitec’s R28 million penalty, R5.5 million has been conditionally suspended for 36 months. Ninety-One’s penalty includes R2.5 million conditionally suspended for the same period.
Both companies cooperated with the regulator and indicated that remedial measures have been implemented to address the identified weaknesses.
The penalties underline the increasing importance of robust compliance systems across South Africa’s banking and financial-services sector. For financial institutions, failures in customer verification, transaction monitoring and sanctions screening can expose businesses to regulatory penalties as well as reputational and operational risks.
The action also signals continued regulatory scrutiny of the systems financial institutions use to prevent money laundering, terrorist financing and other forms of financial crime.