Banking Association shoots down Investec’s ‘SA high risk’ comments

The Banking Association of SA (BASA) has defended the country’s banking system following an Investec manager’s statement that some international investors consider South Africa a high-risk destination.

“I think our Financial Intelligence Centre legislation is at the same level as the British or anyone else,” said BASA managing director Cas Coovadia.

He was responding to a claim that British banks regarded South African banks as being vulnerable to money laundering and terrorism funding.

“We meet all of the guidelines of the financial action task force that oversees the Financial Intelligence Centre regulations.”

He said the SA Reserve Bank (SARB) was proactive in ensuring that banks had systems in place to quickly identify potential money laundering.

At an Investec private banking and wealth discussion this week, the company’s global head of private banking, Ciaran Whelan, said some of their clients considered South Africa a high risk.

He said clients were reluctant to open accounts in the country because of the red tape involved.

“South Africa is deemed to be a high-risk jurisdiction in terms of the compliance, and the amount of paperwork and the number of questions you have to answer is extremely high,” Whelan told the gathering by video conference from the bank’s London offices.

Coovadia said the country’s banking systems were of a good standard.

SARB was efficient and had a track record of being strict with compliance.

“A few years ago, one of the major banks was fined over R100 million, not because there was money laundering, but because SARB was not happy with the efficacy of the systems and structures and they needed to tighten those up.

“I think our systems are good. I don’t agree with what the UK banks are saying. However, we still need to keep to the cutting edge of international best practice.”

Coovadia said BASA had established a centre of excellence for financial services, which conducts research about and looks into the development of the industry.

“It will become the go-to place within the next few years on what banking will look like in the future. We are talking about things like robotics, artificial intelligence and regulatory issues.”

Although BASA funded the centre, it was a separate entity with a separate board chaired by Arrie Rautenbach, an executive with the Barclays Africa group.