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The Citizen
a day ago
- Business
- The Citizen
This is how Prudential Authority cracked the whip last year
The Prudential Authority promotes and enhances the safety and soundness of the financial system by regulating and supervising financial institutions. The Prudential Authority of the South African Reserve Bank cracked the whip during the previous financial year, starting investigations into 35 deposit-taking schemes and fining 16 companies R134.23 million for not complying with the Financial Intelligence Centre Act (Fica). The Prudential Authority is responsible for setting the prudential standards and regulations governing the financial sector to ensure the stability and resilience of financial institutions. The Prudential Authority has the mandate to: Promote and enhance the safety and soundness of financial institutions, such as banks and insurers Protect financial customers against the risk of institutions failing to meet their obligations Support the South African Reserve Bank in maintaining financial stability. The Prudential Authority initiated investigations into 35 illegal schemes accepting deposits from the public. Four more were added from the previous year. In the previous financial year, the Prudential Authority started with investigations into 187 new schemes not registered as insurers, with 60 added from the previous year, while 127 were completed. ALSO READ: The actual cost of non-compliance with Fica Fines from the Prudential Authority for Fica non-compliance The Prudential Authority also conducted 22 investigations at banks, life insurers and branches of foreign banks to check if they comply with anti-money laundering and combating the financing of terrorism requirements. During its inspections, the Prudential Authority found that 16 companies did not comply with the Fica and imposed administrative fines of R134.23 million. R29 million of this amount was provisionally suspended. According to the report, Capitec received the highest administrative fine of R56.25 million, with R10.5 million suspended, as well as seven warnings and a reprimand for non-compliance such as failing to adequately conduct customer due diligence, enhanced due diligence and ongoing due diligence, ensure timely cash threshold reporting, not reporting suspicious transactions and suspicious activity. Old Mutual Life Assurance Company was fined R15.9 million for similar offences, with R5.9 million provisionally suspended. The Prudential Authority also fined Standard Bank R13 million, while Escap SOC was fined R7.6 million for non-compliance with the Insurance Act and other industry standards, as well as standards for corporate management. ALSO READ: Prudential Authority and FSCA reviewing regulations for funeral insurance Extent of Prudential Authority's supervision According to the report, the Prudential Authority supervised 27 banks, including 16 banks registered in South Africa. The assets of these banks were R8 231.2 billion, 6% more than a year ago. These banks supplied loans and credit to the value of R5 873, 5% than a year before and wrote off loans to the value of R308 billion, 3% more than a year ago. The banks were also more profitable, with the average return of earnings reaching 15.8% compared to 14.8% the year before. The three mutual banks in the country had assets to the value of R4.1 billion, 11% more than a year ago, while they supplied loans and credit that were 5% higher than a year ago at R3.2 billion. These banks only started showing a profit since February 2023 after a long period of losses, with an average return of earnings increasing from 2% in the previous year to 3.8%. Loans in arrears amounted to R400 million. The Prudential Authority also supervised 155 insurers with assets of more than R4 960 billion, of which most belonged to life insurers. Insurers paid out claims to the value of R625.7 billion, almost 9% more than the year before. The Authority also supervises the Road Accident Fund and Lloyds.
IOL News
2 days ago
- Business
- IOL News
The Prudential Authority's watchful eye on SA's smaller banks
The South African Reserve Bank's Prudential Authority – tasked with supervising and regulating banks, insurers, and other financial institutions – indicates in its latest annual report that it is keeping a watchful eye over smaller banks. The Prudential Authority (PA) was established on April 1, 2018, as part of the "Twin Peaks" model for financial regulation in South Africa. Twin Peaks is a financial sector regulatory framework that divides regulatory functions between two independent authorities: the PA and the Financial Sector Conduct Authority with the aim of enhancing financial stability and consumer protection. A case in point in terms of risk was the African Bank collapse in August 2014 due to liquidity problems, which mostly came because of excessive unsecured lending that placed the bank under curatorship, effectively splitting it into a "bad bank" and a "good bank". The so-called good bank has subsequently become profitable. African Bank's collapse sped up the introduction of the new oversight regime.
eNCA
3 days ago
- Business
- eNCA
R730-million of looted VBS money recovered
JOHANNESBURG - At least R730-million out of billions of rands looted from the defunct VBS Mutula Bank has been recovered, according to the Prudential Authority's last report. The bank was liquidated in 2018 after 'The Great Bank Heist' report uncovered financial mismanagement. Around R2,3-billion was siphoned. The Prudential Authority says its focus is to claw back the remainder of the money for the benefit of creditors. Municipalities and pensioners had invested in the bank. Twenty-nine cases have been initiated as a result of criminal activities at VBS.
IOL News
23-06-2025
- Business
- IOL News
Prudential Authority imposes hefty sanctions on three major banks for FIC Act breaches
The Prudential Authority (PA) is mandated to supervise and enforce compliance by accountable institutions with the provisions of the Financial Intelligence Centre Act 38 of 2001 (FIC Act) and with any order, determination or directive made in terms thereof. Image: Supplied The Prudential Authority (PA) has unleashed a wave of administrative sanctions on three prominent international banks operating within South Africa following notable breaches of the Financial Intelligence Centre (FIC) Act. This decisive move underscores the authority's commitment to enforcing compliance within the financial sector, as mandated by the South African Reserve Bank (Sarb). In a recent statement, the PA said it imposed administrative sanctions on Citibank N.A. South Africa Branch (Citibank) as a result of its non-compliance with certain provisions of the FIC followed an inspection conducted on Citibank in 2022 in terms of section 45B of the FIC Act. "The administrative sanctions imposed on Citibank consist of a caution not to repeat the conduct which led to the non-compliance as well as a financial penalty totalling R6 million, which is fully and conditionally suspended for a period of 12 months as from 5 March 2025," said the PA. "These administrative sanctions stem from Citibank's failure to comply with section 42 of the FIC Act, in that it failed to implement its Risk Management and Compliance Programme in relation to the assessed advance payment transactions." The PA said Citibank cooperated and has undertaken the necessary remedial action to address the identified compliance deficiencies and control weaknesses. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading Building on this trend of accountability, HBZ Bank has also found itself in the hot seat, facing a total penalty of R9m due to its own lapses uncovered during a 2022 inspection. The sanctions against HBZ include three cautions, two reprimands, and a financial penalty — R1.5m of which is conditionally suspended for 24 months, commencing on 5 March 2025. Specifically, HBZ was found to have neglected its customer due diligence (CDD) obligations under the FIC Act, failing to perform adequate checks on 18 medium-risk and 5 high-risk client files. The regulator also imposed a caution not to repeat the conduct which led to the non-compliance as well as a reprimand after HBZ failed to comply with sections 22 and 23 of the FIC Act, in that it failed to keep records in relation to one of its high-risk trade finance active and terminated client relationships. Furthermore, the bank received additional reprimands related to insufficient record-keeping practices concerning high-risk client relationships and the absence of a documented rationale for the inherent risk rating of trade finance transactions. The third institution caught in this compliance crackdown is the Bank of Taiwan, South Africa Branch (BOTSA). The PA's inspections revealed deficiencies in the bank's management of its RMCP Introduction Manual. The PA said BOTSA failed to secure necessary approvals from its Executive Committee prior to implementing material changes to this vital document. Moreover, the bank did not effectively manage the annual reviews of its RMCP and neglected required due diligence measures on assessed correspondent banking relationships, as stated in its governance policy. It also implemented its RMCP and undertake the requisite due diligence measures in relation to two of its assessed correspondent banking relationships in respect of Vostro accounts; and provide evidence that its Screening of Customers and Transactions Manual had been reviewed and approved after 2020. "The PA confirms that BOTSA cooperated with the PA and that the bank has undertaken thenecessary remedial action to address the identified compliance deficiencies and control weaknesses," said the PA. BUSINESS REPORT
IOL News
13-05-2025
- Business
- IOL News
Prudential Authority appeals ruling allowing Ithala bank to resume operations
The Prudential Authority (PA) has announced that it has launched an application for leave to appeal the 9 May 2025 ruling by the Pietermaritzburg High Court Image: File The Prudential Authority (PA) has launched an application for leave to appeal the May 9, 2025 ruling by the Pietermaritzburg High Court regarding Ithala SOC Limited (Ithala). Judge Muzi Ncube's ruling last week allowed the embattled state-owned bank to resume operations, while also stating that Johannes Kruger, the Repayment Administrator appointed by the Prudential Authority (PA), had no legal right to assume control of the bank's daily operations. KwaZulu-Natal Premier Thami Ntuli welcomed the High Court's decision, noting that the ruling would bring relief to the thousands of clients, employees, and suppliers who have been unable to receive payments due to the current Administrator's halt on all transactions. "We urge the public to stand in solidarity with us as we fight to preserve an institution that represents economic dignity, inclusion, and empowerment for millions," Ntuli said. In a statement released on Monday, the Prudential Authority confirmed it had filed for leave to appeal the ruling, and the Repayment Administrator also intends to challenge the judgment. "It is important to note that the RA has, in any event, complied with the court's prior order not to take control of Ithala SOC Limited's (Ithala) non-deposit-taking operations. However, the RA has been unable to isolate depositor funds from other funds, as Ithala has never maintained a separation between its deposit-taking activities and its other business operations," the statement read. The Prudential Authority further clarified that this judgment is separate from the ongoing liquidation application, which is still pending before the same court. The PA is awaiting the finalisation of the liquidation application. "The PA's primary mandate is to protect depositors. In this context, while the PA understands the frustration and difficulty this situation may cause for depositors, the freezing of accounts remains a necessary and prudent step to safeguard the depositors' remaining funds. "This measure aims to ensure a fair and lawful distribution process of depositor funds while awaiting the outcome of the liquidation application." [email protected] IOL Business Get your news on the go, click here to join the IOL News WhatsApp channel.
