In a significant regulatory action, Absa Bank has been fined R10 million by the South African Reserve Bank’s Prudential Authority (PA) for multiple violations of the Financial Intelligence Centre Act (FICA). This decision follows an inspection conducted in 2022, which revealed serious lapses in the bank's compliance with anti-money laundering regulations.
The PA's sanctions include two cautions not to repeat the non-compliance, a reprimand, and the financial penalty totaling R10 million. The first part of the fine, amounting to R7 million, was imposed due to Absa's failure to conduct adequate customer due diligence on several high-risk clients, specifically four foreign prominent public officials (FPPOs) and two politically exposed persons (PEPs) associated with state-owned enterprises.
Furthermore, the bank failed to conduct enhanced due diligence on three domestic prominent influential persons (DPIPs) and five additional FPPOs. Such oversights are particularly concerning, given the heightened risk of financial crimes associated with these individuals.
In addition to the customer due diligence failures, the PA found that Absa did not comply with FICA Directive 5 of 2019. This directive emphasizes the importance of timely responses to alerts generated by automated transaction monitoring systems (ATMS). Specifically, the bank neglected to address 8,559 reported ATMS alerts within the required 48-hour timeframe. Additionally, four non-reportable ATMS alerts and two suspicious transaction reports were not attended to within the stipulated timeframes, leading to a further R3 million fine.
The total penalties imposed on Absa reflect a growing trend of regulatory scrutiny within South Africa's financial sector, especially as the country seeks to improve its compliance standing following its grey listing by the Financial Action Task Force (FATF) last year. The PA has made it clear that financial institutions will face strict enforcement of compliance measures aimed at preventing money laundering and financing of terrorism.
Absa's situation is not unique; it joins a list of other South African banks that have faced similar penalties. Recently, Capitec Bank was fined R56.25 million, with R10.5 million suspended for 26 months, while Standard Bank incurred a R13 million fine at the start of 2025. In 2024, Sasfin Bank faced a staggering R210 million penalty for various compliance failures.
In a statement following the announcement of the fines, the PA acknowledged that Absa had cooperated fully during the investigation and had already taken steps to rectify the compliance issues identified. The bank is reportedly implementing new control measures aimed at preventing future breaches.
Financial experts have noted that the penalties serve as a warning to the sector, indicating that regulators are unlikely to show leniency in the face of compliance failures. As South Africa works to rebuild its international reputation, the PA's rigorous enforcement of FICA regulations is expected to continue.
As part of its commitment to compliance, the PA will conduct routine inspections of financial institutions to ensure adherence to legal requirements designed to safeguard the integrity of South Africa's financial system.
In summary, Absa Bank's R10 million fine highlights the critical importance of compliance in the financial sector, particularly regarding the scrutiny of high-risk clients and the timely management of transaction alerts. The bank's prompt response to the PA's findings may help mitigate future risks and reinforce its commitment to regulatory standards.
