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South African Fund Manager Fined R3 Million for Failing to Comply with Financial Intelligence Centre Act

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South Africa’s Financial Sector Conduct Authority (FSCA) has imposed a significant R3 million fine on Ninety One Fund Managers (91FM) for failing to comply with critical provisions of the Financial Intelligence Centre Act (FICA).

The administrative penalty, which includes a R500,000 suspension over a period of three years, comes after the FSCA found serious gaps in Ninety One’s Risk Management and Compliance Programme (RMCP) and failures in tracking and verifying clients.

According to the FSCA, the violations were particularly concerning given the scale and complexity of Ninety One’s operations within South Africa’s financial sector. The key issues identified included:

  • Inadequate client risk ratings,

  • Failure to perform customer due diligence to assess links to terrorism financing, and

  • Lapses in verifying the identity of clients and their beneficial owners.

The FSCA’s inspection in 2023 revealed that Ninety One had not fully identified or verified some clients and their beneficial owners. Additionally, the firm had failed to conduct the necessary ongoing due diligence, raising alarms about its compliance controls.

While Ninety One initially appealed the FSCA’s findings in November 2024, the company has since opted to settle with the authority. As part of the settlement, the firm agreed to remediate the violations and comply with the FSCA’s regulatory standards moving forward.

FSCA’s Caution to the Industry

The FSCA has emphasized that non-compliance with FICA is not taken lightly. In a statement, the authority underscored the serious nature of the breaches, considering Ninety One’s influential role in South Africa’s financial system.

“An effective RMCP is critical not just for protecting institutions from financial crime, but also for maintaining the integrity of the South African financial system as a whole,” the FSCA commented.

The authority also reminded all financial institutions operating in the country to remain vigilant in their anti-money laundering and anti-terrorism financing measures. This case serves as a stark reminder that any failures in compliance can lead to regulatory action.

The R3 million fine, though significant, reflects the FSCA’s ongoing efforts to ensure that financial institutions uphold the highest standards of integrity and security in their operations. For Ninety One, the suspended fine provides an opportunity to show compliance, with a critical three-year monitoring period ahead.

As the case unfolds, it serves as a crucial reminder to all financial institutions to regularly review their due diligence practices and ensure that they remain compliant with evolving financial regulations.

{Source: BusinessTech}

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