Capitec Bank has been fined R28 million by the Prudential Authority (PA) due to violations related to customer due diligence, staff training, and anti-money laundering and counter-terrorism financing measures.
One of South Africa's largest banks, Capitec, was penalized by the PA for failing to comply with several provisions of South Africa's anti-money laundering legislation. This decision followed an inspection that revealed weaknesses in customer due diligence procedures, enhanced and ongoing due diligence, as well as controls concerning financial sanctions and terrorist asset reporting.
The PA reported that Capitec failed to properly conduct checks on selected client files and lacked adequate processes and control mechanisms to manage certain money laundering and terrorism financing risks. Furthermore, deficiencies were found in the bank's staff training, as well as in the approval and documentation of some verification and reporting procedures.
Of the total fine of R28 million, R5.5 million was conditionally suspended for a period of 36 months. The PA stated: 'The administrative sanctions imposed on Capitec include five warnings against repeating the behavior that led to non-compliance, and a financial penalty totaling R28 million, of which R5.5 million is conditionally suspended for a period of 36 months from October 13, 2025.'
Five Areas of Non-Compliance
The PA also noted that Capitec cooperated with the regulator and took steps to address the identified compliance shortcomings and control system weaknesses during the inspection. The sanctions relate to five areas of non-compliance under the Financial Intelligence Act, including customer due diligence, enhanced due diligence, ongoing due diligence, staff training, and the bank's risk and compliance management program.
The regulator imposed a fine of R10 million for failures in customer due diligence, R5 million each for failures in enhanced and ongoing due diligence, R3 million for staff training, and another R5 million for deficiencies in the bank's policies and controls regarding terrorist asset reporting and financial sanctions. The PA added that 'Capitec is cooperating with the PA to rectify the identified compliance shortcomings and control system weaknesses.'
Customer Due Diligence and Training
The PA found that Capitec did not ensure proper customer due diligence on selected client files. The bank also failed to conduct adequate enhanced and ongoing due diligence on some of these files. Additionally, the regulator discovered that Capitec did not provide continuous training to selected employees.
