Table of Contents
Key Points
- SARB fines Capitec Bank for R56.25 million ($2.97 million) over breaching the Financial Intelligence Centre Act (FIC Act) during 2021-2022 inspections.
- Penalties stem from inadequate client verification, insufficient PEP screening, delayed transaction reports, and weak risk management and compliance programs.
- Capitec, co-founded by Michiel Le Roux, remains a major player with $12.8 billion in assets and strong market growth.
Capitec Bank, one of South Africa's leading retail banks co-founded by billionaire banker Michiel Le Roux, has been sanctioned by the South African Reserve Bank (SARB) for breaching provisions of the Financial Intelligence Centre Act (FIC Act).
The penalties, according to the inspections conducted by Prudential Authority (PA), operating under SARB, highlight significant lapses in the bank's anti-money laundering (AML) and customer due diligence measures.
Capitec Bank fined for non-compliance
According to its publication, the SARB’s Prudential Authority (PA) fined Capitec Bank R56.25 million ($2.97 million), with R10.5 million ($0.55 million) conditionally suspended for 36 months from July 30, 2024, after inspections in 2021 and 2022 revealed non-compliance-with-the-FIC Act in its retail and business segments.
Key breaches included inadequate client verification, failure to identify beneficial owners, insufficient PEP screening, delayed cash threshold reports (CTR), late submission of suspicious transaction reports (STRs), and neglecting transaction monitoring alerts under Directive 5.
Deficiencies in its risk management and compliance program (RMCP), including weak risk assessments and delayed board approvals, led to additional fines of R11.25 million ($0.59 million). Despite the sanctions, Capitec maintained cooperation in its remedial measures to address compliance weaknesses and enhance its AML framework.
Capitec’s position in the market
Founded 20 years ago by Michiel Le Roux, Jannie Mouton, and Riaan Stassen, Capitec has grown into one of the world’s largest retail banks. Renowned for its commitment to affordable banking services, the bank offers a range of products, including term loans, credit cards, and credit facilities, catering to a broad customer base.
As of August 31, 2024, Capitec reported total assets of R222.73 billion ($12.80 billion), reflecting an 11.09 percent increase from the previous year, while equity rose to R45.96 billion ($2.64 billion).
Recent sanctions against the bank underscore the critical need for financial institutions to maintain robust compliance frameworks. This case highlights the growing scrutiny on banks as they navigate evolving anti-money laundering (AML) regulations and customer due diligence requirements, emphasizing the importance of regulatory trust in the financial sector.
