The South African Reserve Bank (SARB) has imposed administrative sanctions of R13 million on Safrican Insurance Company (Safrican) as a result of its non-compliance with the provisions of the Financial Intelligence Centre (FIC) Act, following a FIC Act inspection conducted in 2020.
Safrican is a life insurer with a footprint in South Africa and a subsidiary in Swaziland, with more than 2 million principle lives covered and more than 7m lives assured.
The SARB’s Prudential Authority (PA) is mandated to supervise and enforce compliance by accountable institutions with the provisions of the FIC Act or any order, determination or directive made in terms thereof.
The Reserve Bank said on Friday the administrative sanctions imposed on Safrican were as a result of its failure to comply with certain provisions of the FIC Act and consists of three cautions and a total financial penalty of R13m, of which R6m was conditionally suspended for 36 months as from 10 June 2024.
“The administrative sanctions imposed upon Safrican stem from the following non-compliance: a. Safrican failed to comply with its customer due diligence obligations in terms of sections 21(1) and/or 21A to 21H of the FIC Act, in that it failed to adequately conduct customer due diligence and enhanced due diligence on sampled active customer relationships, including domestic prominent influential persons.
“The PA imposed a caution not to repeat the conduct which led to the non-compliance and a financial penalty of R10m, of which R5m was conditionally suspended for 36 months. Safrican failed to comply with its record-keeping obligations in terms of sections 22 and/or 23 of the FIC Act, in that it failed to keep records of the sampled client files.
“The PA imposed a caution not to repeat the conduct which led to the noncompliance. c. Safrican failed to comply with section 42 of the FIC Act, in that it failed to adequately develop and implement its Risk Management and Compliance Programme, including: i. an inadequate reflection on the identification and assessment of risk linked to the risk rating matrix; ii. the failure to evidence that a documented methodology and/or step-by-step working method was applied to identify and assess money laundering and terrorist financing (ML/TF) risks; and iii. the failure to sufficiently consider risk factors such as client ML/TF risk, geographical risk, product risk, delivery channel risk, and anti-money laundering and combating the financing of terrorism (AML/CFT) information technology, AML/CFT risks linked to systems utilised.”
South Africa was greylisted by the Financial Action Task Force (FATF) in February 2023 for having serious issues with the strength of its anti-money laundering and anti-terrorist financing regimes.
Last month, the PA reported that it investigated 134 referrals alleging non-compliance with various laws such as the Insurance Act and levied administrative penalties totalling R2.7m against four organisations under its ambit during the 2023/24 year.
Meanwhile, the SARB’s PA said it imposed a caution on Safrican not to repeat the conduct which led to the non-compliance and a financial penalty of R3m, of which R1m was conditionally suspended for 36 months.
The bank said Safrican co-operated with the PA and has since remedied the identified compliance deficiencies and control weaknesses.
“The administrative sanctions imposed on Safrican are not due to it having any involvement in and/or facilitating any transactions relating to money laundering or the financing of terrorism,” it said.
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