The central bank said the Financial Intelligence Centre Act (Fica) mandated it to ensure that banks had adequate controls in place to combat acts of money laundering and the financing of terrorism.
“It should be noted that the administrative sanctions were not imposed because CCB was found to have facilitated transactions involving money laundering or the financing of terrorism, but because of weaknesses in the bank’s control measures,” the Sarb said.
CCB, China’s second-biggest lender by assets, established its Johannesburg branch in October 2000.
The company says on its website that the South African arm concentrates on localisation, with the majority of the clients being African corporations, including more than 20 of South African-listed companies, state-owned companies and international companies.
In 2009, FirstRand partnered with CCB to help both companies win investment, corporate and project finance deals in Africa.
In 2015, the Industrial Development Corporation (IDC) and CCB signed a strategic co-operation agreement to promote infrastructure and industrial development in South Africa and the rest of Africa.
In terms of the agreement, the CCB had committed to investing R10billion in South Africa and the rest of Africa in co-operation with the IDC.
The two institutions also partnered in creating a $2bn (R24.15bn) fund to finance industrial development and infrastructure projects in the country and on the continent.
The Sarb said the multimillion-rand penalty came after the Sarb was dissatisfied with five key areas in CCB’s control measures.
The central bank directed the CCB to take remedial action in identifying and verifying customers’ details.
The Sarb also found the CCB had failed to comply with record keeping requirements in terms of section 22 of Fica.
CCB was also found to have failed to formulate and implement adequate processes and working methods to detect and report property associated with terrorist and related activities in terms of Section 28A of Fica.
The bank was also found to have failed to comply with suspicious and unusual transaction reporting requirements in terms of Section 29 of Fica, and of having failed to comply with cash threshold reporting requirements in terms of Section 28 of Fica.
The Sarb said the CCB was co-operating with it and had taken measures to address the identified compliance deficiencies and control weaknesses.
CCB could not be reached for comment on what measures it had put in place to comply with the law.
Last year, several local and international banks were slapped with administrative fines by the central bank for weak anti-money laundering and combating of financing terrorism controls.
The banks included Investec, Absa, Standard Chartered, as well as Habib Overseas Bank. Overall, the banks were fined a total of R46.5m. Absa was fined R10m for weaknesses related to their transaction monitoring. Investec received the largest fine of R20m.
This was due to their failure to implement adequate processes to screen the related parties of customers.
- BUSINESS REPORT