Finance minister Tito Mboweni. Picture: ESA ALEXANDER
Finance minister Tito Mboweni. Picture: ESA ALEXANDER

Registered banks have had to fork out R277m in fines and penalties for their failure to comply with legislation aimed at combating money laundering and the financing of terrorism in the six years between January 2014 and December 2019.

This was revealed on Tuesday by finance minister Tito Mboweni in a written reply to a parliamentary question by DA MP Dennis Ryder.

The Financial Intelligence Centre Act (Fica) requires reporting institutions and entities including banks, life insurance companies, estate agents and motor vehicle dealers, among others, to report all cash transactions over R25,000, as well as all suspicious or unusual activities or transactions. The aim is to detect money laundering and the financing of terrorism.

The act was developed and has been amended over the years to comply with international standards.

Mboweni said large banks had paid R157.5m in fines and penalties over the period, with Standard Bank paying R82.5m, Absa R20m, Nedbank R25m and FirstRand R30m. The amount paid by all registered banks over the period was R276.7m.

These fines and penalties are issued by the Reserve Bank’s Prudential Authority.

Mboweni noted that from April 1 to March 31 in each year, regulatory reports were submitted to the FIC by reporting institutions and entities. In 2015/2016,  9,5-million were submitted and 5-million in 2016/2017. In 2017/2018, 5,2-million were submitted and 5,5-million in 2018/2019.

The figures for 2019/2020 are still being audited by the auditor-general, he said.

“The mandate of the FIC is to use the regulatory reports it receives to develop financial intelligence, which is disseminated to the competent authorities,” Mboweni explained.

“The FIC’s mandate does not extend to conducting investigations or instituting prosecutions. Once the FIC's financial intelligence reports are provided to the competent authorities, they are able to convert the intelligence into evidence, by conducting investigations and/or making applications for seizure of assets.

“The FIC’s financial intelligence reports do not therefore confirm the flow of ill-gotten gains and/or money laundering but, they provide leads for competent authorities to follow up in their investigations.”

Mboweni said Fica required the FIC to also share its financial intelligence with various commissions of inquiry. It has submitted 25 financial intelligence reports to the Zondo commission and the investigative directorate of the National Prosecuting Authority.

“Once the FIC's financial intelligence reports are provided to a commission of inquiry, that commission is able to convert the intelligence into evidence by conducting investigations,” Mboweni said.

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