South African regulator punishes Bank of Baroda

A South African regulator has imposed a reduced penalty of 400,000 South African rands (Sh2.7 million or $27,000) on the local unit of India’s Bank of Baroda for non-compliance with certain provisions of the Financial Intelligence Centre Act (FIC).

The Prudential Authority (PA), which supervises and enforces the FIC Act, said on Tuesday last week the penalty follows an on-site inspection in 2014 that found deficiencies relating to compliance, as well as weaknesses in controls to counter potential money laundering and terrorist financing.

In 2016, the PA conducted a follow-up inspection, which found that some deficiencies in controls remained.

Following that, the Bank of Baroda was slapped with administrative sanctions, including a combined financial penalty of 11 million rands for non-compliance with the FIC Act and deficiencies in respect of money laundering controls, the PA said.

Financial penalty

Bank of Baroda lodged an appeal and the Appeal Board reduced the 11 million rands financial penalty to 400,000 rands, the PA said. It confirmed that the bank had now paid the penalty.

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“This statement is to notify members of the public that an administrative sanction comprising a financial penalty in the amount of 400,000 rands has been imposed on Bank of Baroda for failure to comply with the cash threshold reporting requirement in terms of section 28 of the FIC Act,” the regulator said.

There was no comment from Bank of Baroda. Baroda’s South African division was thrust into the spotlight three years ago when it started working with the Indian-born Guptas after corporate South Africa, including all four major banks, turned its back on the family’s businesses due to reputational risks.

In June 2018, an elite South Africa police unit raided the offices of Bank of Baroda’s local unit and seized documents as part of an investigation into alleged state corruption under former president Jacob Zuma.

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Prudential AuthorityBank of Baroda