Three Banks Sanctioned in South Africa Over Anti-Money Laundering Compliance Failures

SA’s financial watchdog is tightening the screws three major banks are now in the spotlight for failing to uphold anti-money laundering standards.

Why Are Banks Being Sanctioned Now?

South Africa’s Prudential Authority, operating under the South African Reserve Bank (SARB), has issued administrative sanctions against HBZ Bank Limited, Citibank South Africa, and the Bank of Taiwan South Africa (BOTSA). Their common offence? Failing to fully comply with the Financial Intelligence Centre Act (FIC Act), the country’s key legislation for combatting money laundering and terrorist financing.

These inspections were conducted in 2022, but the sanctions were only made public now, amid a growing trend of intensified scrutiny following South Africa’s greylisting by the Financial Action Task Force (FATF) in 2023.

The message from regulators is clear: if you’re not tightening compliance controls, expect consequences.

HBZ Bank: R9 Million in Penalties

HBZ Bank Limited, a subsidiary of Switzerland-based Habib Bank AG Zurich, received the harshest penalty, R9 million, with R1.5 million conditionally suspended.

Key failings included:

• Poor due diligence on 23 high- and medium-risk clients.

• Lack of record-keeping for a terminated high-risk trade finance client.

• Weak risk assessment and inadequate documentation around trade finance transactions.

• Failure to implement its own Risk Management and Compliance Programme (RMCP).

The Prudential Authority issued three cautions, two reprimands, and multiple financial penalties. Although HBZ cooperated and is addressing the issues, the scale of non-compliance has raised serious concerns.

Citibank: Suspended Sanction, but a Warning Shot

The South African branch of global giant Citibank was fined R6 million, but the fine has been fully suspended for 12 months essentially a warning with conditions.

Citibank’s violation was primarily its failure to implement its RMCP on advance payment transactions. While the fine carries no immediate financial sting, it signals that even large international banks aren’t above the rules.

Bank of Taiwan: No Fine, But Serious Lapses

The Bank of Taiwan South Africa (BOTSA) avoided a financial penalty but was sanctioned for several critical compliance shortcomings, including:

• Implementing material amendments to its RMCP without board approval.

• Neglecting annual reviews of compliance manuals.

• Weak due diligence on correspondent banking relationships tied to Vostro accounts.

• Outdated customer screening processes, with no evidence of post-2020 reviews.

Though BOTSA escaped a monetary fine, its failures are stark reminders of what FATF greylisting aimed to spotlight: outdated governance and lax oversight in the financial system.

A Broader Trend in a Greylisted Economy

These sanctions aren’t isolated. Absa, Capitec, and Standard Bank have also faced similar scrutiny recently, part of a wider compliance crackdown since South Africa’s greylisting by FATF.

Being on the greylist means the country is viewed as having strategic deficiencies in its anti-money laundering and counter-financing of terrorism regimes. This designation raises red flags for foreign investors and global financial institutions, who may treat South African institutions with added caution.

What’s the Real Risk Here?

It’s important to note: none of the banks were found guilty of criminal activity. The issue is systemic compliance, not deliberate wrongdoing.

Still, for the average South African or business relying on the integrity of the banking sector, these failures highlight just how much more work needs to be done to align with international standards.

The Prudential Authority, while fair, is signalling that good intentions are no longer enough. Documentation, consistent implementation, and governance structures need to be watertight or else.

Public Reaction and What Comes Next

Online, reactions have been mixed. Some South Africans welcomed the oversight, seeing it as proof that financial regulators are finally taking compliance seriously. Others questioned why it took inspections from 2022 to trigger action in mid-2025.

Regardless, the move reflects a more assertive regulatory posture. And with Operation Vulindlela aiming to modernize state systems and improve international credibility, financial integrity is now as much about national reputation as it is about internal risk.

South Africa is cleaning house and the pressure’s mounting. As global eyes remain on the country’s financial institutions, sanctions like these are both warning shots and road signs. Comply or be counted among the careless.

The challenge now is whether South Africa can restore confidence, tighten controls, and finally exit the FATF greylist ,with banks, big or small, pulling their weight.

{Source: BusinessTech}

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