Absa Bank Led By Sello Moloko Faces Fresh Sanctions

Absa faces sanction for failing to meet Financial Intelligence Centre Act FIC customer due diligence and reporting standards, following 2022 inspection.

The Prudential Authority sanctioned Absa for lapses in monitoring foreign and domestic politically exposed persons and delayed suspicious transaction reporting.

Despite penalties, Absa is strengthening internal controls and expanding operations, including a planned Dubai office and a partnership with PepsiCos Kgodiso Fund.

Absa Group, the Johannesburg-based financial services provider chaired by South African businessman Sello Moloko, is facing administrative sanctions from the Reserve Bank's Prudential Authority PA for failing to comply with the Financial Intelligence Centre FIC Act. This follows an inspection in 2022, which uncovered gaps in Absa's adherence to important regulatory standards.

On Friday, Apr. 25, the Prudential Authority, responsible for overseeing South Africas financial institutions, announced the sanctions. The penalties stemmed from Absa's failure to meet customer due diligence and reporting requirements under the FIC Act.

Absa's shortcomings were mainly in its customer due diligence processes, especially concerning foreign prominent public officials FPPO and politically exposed persons PEPs. The bank failed to conduct proper due diligence on four FPPO client files and two PEP files tied to state-owned enterprises. Additionally, Absa did not carry out enhanced due diligence on three domestic prominent influential persons DPIPs and five FPPO client files.

In response, the PA issued a caution to Absa, urging the bank to avoid repeating these mistakes, alongside a reprimand and a R10 million 0.54 million fine. The fine breaks down into R7 million 0.37 million for the failure to perform due diligence and R3 million 0.16 million for not reporting suspicious activities within the required timeframes.

Despite the sanctions, Absa has been cooperative with the PA's investigation and has taken corrective actions. The bank is strengthening internal controls and refining its monitoring processes to ensure compliance with regulatory expectations.