Rédaction Africa Links 24 with Neesa Moodley
Published on 2024-02-28 13:10:19
During a routine inspection conducted between 17 October and 15 November 2022, the Financial Sector Conduct Authority (FSCA) identified several deficiencies in the operations of Ashburton, a subsidiary of the FirstRand group with approximately R140 billion in assets under management as of January this year.
The FSCA found that Ashburton was in violation of the Financial Intelligence Centre (FIC) Act by failing to adequately identify and verify the identity of certain clients, including beneficial owners. While Ashburton had developed a risk management and compliance program, it lacked clarity on how it would comply with the FIC Act in various areas such as examining complex transactions, conducting customer due diligence in suspicious cases, terminating relationships, determining reportable activities to the FIC, and implementing the compliance program.
Additionally, Ashburton had not screened its clients, including beneficial owners, against the Targeted Financial Sanctions lists at the time of the inspection. In response to queries from Daily Maverick, Ashburton acknowledged the shortcomings and disclosed that a remediation program had been initiated to address these issues, with notable progress already achieved in key areas.
The remediation program includes enhancements to financial crime policies, improvements to client due diligence processes, and screening procedures. Ashburton clarified that there was no evidence of terrorist financing or money laundering in their transactions and reassured that clients’ funds and investments were unaffected. Duzi Ndlovu, the CEO of Ashburton Investments, expressed full support for the FIC Act and emphasized the importance of a robust regulatory environment in safeguarding the industry amidst South Africa’s greylisting.
The FSCA regarded Ashburton’s contraventions of the FIC Act as serious violations, especially considering the nature and size of its business operations. The authority highlighted the significance of managing money laundering and terrorist financing risks through a robust compliance program to uphold the integrity of the financial system. Proper customer due diligence and screening were deemed imperative to prevent criminal elements from infiltrating the financial sector, particularly for institutions within large financial services groups.
As a result of the corrective measures implemented by Ashburton, the FSCA agreed to suspend R6 million of the total penalty for three years on the condition of full compliance with the directive to rectify the remaining deficiencies. Ashburton had already paid R10 million of the penalty by the specified deadline of 28 February. The regulatory authority stressed the importance of accountable institutions continuously enhancing their anti-money laundering and terrorist financing controls to avoid regulatory repercussions.
The sanction imposed on Ashburton serves as a stern warning against non-compliance with the FIC Act, underscoring the imperative for accountable institutions to uphold stringent measures to combat financial crimes. The FSCA urged all institutions to consistently review and fortify their risk control frameworks to mitigate potential risks effectively. Failure to adhere to these requirements may result in severe regulatory action, emphasized the FSCA.
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