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Bank of Baroda South Africa has been fined R400 000 by the Prudential Authority for non-compliance with some provisions of the Financial Intelligence Centre Act, the Reserve Bank said in a statement issued on Tuesday evening.
Bank of Baroda has paid the fine into the Criminal Assets Recovery Account, within the National Revenue Fund, the central bank said. The India-based bank made headlines for being the only bank to take on Gupta business accounts after SA's four major banks - ABSA, Standard Bank , FNB and Nedbank - closed Gupta accounts. Bank of Baroda has been accused of facilitating questionable transactions for Gupta-linked firms.
The bank closed its operations in SA in 2018.
As far back as 2014, the Prudential Authority – which was then known as the Bank Supervision Department (BSD) of the Reserve Bank - conducted an on-site inspection at the Bank of Baroda, the SARB said.
The Prudential Authority is a regulator of banks and other financial institutions and operates within the administration of the SA Reserve Bank. It is mandated by the FIC Act to supervise and enforce compliance with its provisions. As a result, the Prudential Authority assesses accounting authorities, such as banks, to make sure they have "adequate measures and controls in place" to effectively comply with the act.
"Following the inspection, deficiencies relating to compliance with the FIC Act were identified, as well as weaknesses in controls to counter potential money laundering and terrorist financing.
"BSD instructed Bank of Baroda to rectify the weaknesses identified. Bank of Baroda assured BSD that such compliance deficiencies had been remediated," the SARB said.
However, in 2016, the Prudential Authority conducted a follow-up inspection and found some deficiencies in the controls remained and impacted on bank of Baroda's ability to comply with the FIC Act, the SARB added.
The BSD initially fined Bank of Baroda R11m for non-compliance with the FIC Act and for deficiencies in respect of money laundering controls. These were related to Bank of Baroda's processes in reporting of transactions.
Bank of Baroda appealed the R11m fine, and the Appeal Board agreed to reduce it to R400 000. The BSD then turned to the North Gauteng High Court to appeal the reduction to R400 000. But the high court upheld the Appeal Board's decision.
In its statement, the SARB confirmed that Bank of Baroda's administrative sanction is a financial penalty amounting R400 000 for its failure to comply with section 28 of the FIC Act, which relating to reporting requirements of transactions above a prescribed amount.
