Inside the compliance failures behind Capitec’s R28 million fine - IOL

Capitec Bank has been fined R28 million by the Prudential Authority for compliance failures linked to customer due diligence, employee training and controls aimed at preventing money laundering and terrorist financing.

Capitec Bank has been hit with administrative sanctions for failing to comply with certain requirements of the Financial Intelligence Centre Act (FICA).

The Prudential Authority, which operates within the South African Reserve Bank, announced the sanctions on Friday following inspections conducted at the institution in 2023.

The PA said Capitec failed to properly conduct due diligence on sampled client files and did not have adequate processes and controls in place to manage certain money-laundering and terrorist-financing risks.

The bank was also found to have shortcomings in its training of employees and in the approval and documentation of some of its screening and reporting procedures.

Capitec's penalty totals R28 million, of which R5.5 million has been conditionally suspended for 36 months.

"The administrative sanctions imposed on Capitec consist of five cautions not to repeat the conduct that led to the non-compliance, and a financial penalty totalling R28 million, of which R5.5 million is conditionally suspended for a period of 36 months as from 13 October 2025", the PA said.

The Prudential Authority identified several areas of non-compliance during its inspection.

These included shortcomings in the bank's customer due diligence, enhanced due diligence and ongoing due diligence on sampled client files.

The regulator also found that Capitec had failed to provide adequate ongoing training to some employees.

Another finding related to the bank's risk management and compliance programme.

The Prudential Authority found shortcomings in processes relating to terrorist property reporting and financial sanctions, among other areas.

Capitec's business bank had also implemented anti-money laundering name-screening and payment-screening investigation manuals without first obtaining management approval.

Capitec told Moneyweb that the sanction relates to administrative gaps in certain compliance processes during the period from 2019 to 2023.

The bank said the shortcomings included aspects of client due diligence, employee training and regulatory reporting.

"The sanction relates to identified administrative gaps in certain compliance processes, including aspects of client due diligence, training, and regulatory reporting, over the period 2019 to 2023," Capitec said.

"Importantly, these findings do not relate to any instances of money laundering, illicit financial activity, fraud, scams or financial loss at Capitec."

The bank said it acknowledges the role of the Prudential Authority and other regulatory bodies in enforcing FICA standards and supporting South Africa's commitments to the Financial Action Task Force.

Ninety One Assurance Limited, a subsidiary of asset manager Ninety One, was also fined R6 million by the Prudential Authority following an inspection conducted in 2023.

Of the R6 million penalty, R2.5 million was conditionally suspended for a period of three years.

The Prudential Authority found that Ninety One Assurance had failed to establish and maintain a risk management programme that would enable it to properly identify, evaluate, monitor and reduce risks associated with politically exposed and other high-risk persons and their businesses.