South Africa Fines CCB USD6.2 Million Over Lacking Money Laundering Measures
Xu Wei
/SOURCE : Yicai
South Africa Fines CCB USD6.2 Million Over Lacking Money Laundering Measures

(Yicai Global) Feb. 6 -- China Construction Bank Corp. (CCB) Johannesburg branch suffered administrative penalties of ZAR75 million (USD6.2 million) from South African's central bank over its weakness in anti-money laundering and anti-terrorist financing controls. The bank is now taking steps to rectify, online news outlet Jiemian reported yesterday.

South Africa's central bank discovered during an inspection that CCB's Johannesburg branch had failed to comply with the Financial Intelligence Center Act (FIC Act), which includes identifying and verifying customer information ('Know Your Customer'), record-keeping requirements, cash threshold reporting, as well as failure to develop and implement appropriate processes and work methods to detect and report on property related to terrorism and related activities and dereliction of its suspicious and unusual transaction reporting requirements, the central bank said in a Feb. 2 statement.

It accordingly fined CCB's Johannesburg branch ZAR75 million and instructed it to take remedial measures. However, the statement specifically noted that the administrative punishment did not rest on a finding that CCB was involved in money laundering or terrorist financing transactions but was because of its weak control measures. From Nov. 28, 2017, ZAR20 million of the fine will be suspended for three years,  per relevant provisions of law. Whether payment becomes due or not depends on CCB's compliance with the conditions the central bank has imposed.

CCB is working with the central bank and has already begun to address those identified compliance defects and control weaknesses.

Against the backdrop of Chinese-funded financial institutions speeding the pace of their forays overseas and more stringent international anti-money laundering regulation in recent years, the risk of overseas anti-money laundering compliance Chinese banks face continues to escalate. Regulatory authorities abroad have investigated and/or sanctioned the overseas branches of all big four Chinese state banks over anti-money laundering compliance issues.

The Federal Reserve Bank of New York similarly required CCB's New York branch to formulate and implement a plan to fill loopholes in its anti-money laundering measures in July 2015. Italian prosecutors also charged Bank of China Co. Milan branch with alleged money-laundering, reaching a settlement in February 2017. BOC paid a fine of EUR600,000 for the offense and four employees received two-year suspended sentences for money laundering.

Industrial and Commercial Bank of China Ltd. Madrid branch in Spain was investigated on suspicion of money laundering by local police who temporarily detained six employees in February 2016. Agricultural Bank of China Co. New York branch was fined USD215 million by the New York State Department of Financial Services in November 2016 for violating the state's anti-money laundering law and covering up suspicious financial transactions.

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Keywords: South Africa , China Construction Bank , Industrial And Commercial Bank of China , Bank of China , Agricultural Bank of China , Anti-Money Laundering