Governance Risk and Compliance Management assignment material

$2024$

Assignment $1$

$(25$ marks$)$

Due date $16/05/2024$

According to a recent press report, The South Reserve Bank $($hereafter "The Bank"$)$

fined Capitec and the local branch of Deutsche Bank a combined total of R$25$m last

year for shortcomings in the systems they have in place to combat money

laundering, the Bank said in the annual report of its Bank Supervision Department.

The Bank also announced that deputy governor, Kuben Naidoo, would take over as

registrar of banks from Rene van Wyk$,$ who will retire as registrar at the end of this

year. Mr Naidoo will serve in both the deputy governor and registrar roles, in order

to facilitate the transition to the new Twin Peaks regulatory system.

The Bank's supervision department is responsible for ensuring that banks have

systems and measures in place to comply with the provisions of the Financial

Intelligence Centre Act $($hereafter FICA$)$ on money laundering and terror financing.

The Bank emphasised the decision to impose administrative sanctions on Deutsche

Bank and Capitec "was not based on any evidence that Deutsche Bank or Capitec

facilitated transactions relating to money laundering and$/$or financing of terrorism

activities." Nevertheless, Capitec was fined R$5$m for failing to report cash

transactions above R$24,999\mathrm{.}00$ to the Financial Intelligence Centre in line with the

legislation and it was directed to take remedial action.

Deutsche Bank's "know your customer" measures were inadequate and

consequently, it was fined R$10$m and was directed to address deficiencies in its

controls and systems related to detecting property related to terrorism. The Bank

confirmed in February $2015$ that the fines is the result of a routine inspection that

identified inadequacies in Deutsche's 'know your customer" processes and other

FIC related controls.

$1\mathrm{.}1$ Read the report from the Business day and identify any six possible risks that

the banks' face for non$-$compliance with the Financial Intelligence Centre Act.

$1\mathrm{.}2$ Give reasons from the article why the Bank imposed administrative fines on

Capitec and Deutsche Bank.

$1\mathrm{.}3$ You are a compliance officer at Deutsche Bank. Explain to the compliance staff

members what is required for the bank to comply with the "know your customer"

$($KYC$)$ legislative requirements under FICA.

$1\mathrm{.}4$ In the context of this report, Identify and describe the nature of compliance

monitoring role by the regulator.

$1\mathrm{.}5$ Under the "Know your customer "concept, list the three types of identity

documents that are considered adequate for purposes of identifying a potential client