VBS fined R2.5m for flouting money-laundering regulations

In 2017, embattled VBS Mutual Bank was fined R2.5-million by the South African Reserve Bank (SARB) for failing to comply with regulations aimed at preventing money laundering and combatting the financing of terrorism.

This is according to the 2017 annual report from the Reserve Bank’s banking supervision department, which was released on Tuesday morning.

The mutual bank — which was put under curatorship in March — was give a R2.5-million fine with R2-million suspended for one year, and given a directive to take remedial action to correct the deficiencies in its controls.

READ MORE: VBS-linked Limpopo municipalities face provincial probe

VBS was fined for not identifying and verifying customers’ details, and failing to report certain cash transactions over R25 000 to the Financial Intelligence Centre (FIC). It also failed to “implement adequate methods in relating to the sanctions screening of customers to ensure that the bank complies with its reporting duties,” the Reserve Bank noted in the report.

It also did not have adequate controls and methods in place to report suspicious and unusual transactions according to the report.

After VBS was placed under curatorship, indications of mismanagement and possible corruption have since emerged, prompting the Reserve Bank to order a forensic investigation into its affairs.

READ MORE: ‘VBS refused to take me seriously’

The bank’s curator Anoosh Rooplal, said recently in court papers that R900-million could not be accounted for and there was evidence of large loans made to directors and related parties that may not be recoverable.

Alongside VBS the China Construction Bank Corporation (CCBC) — which has a Johannesburg branch — was fined a R75-million, with R20-million suspended for three years.

Amongst its infractions the CCBC failed to identify and verify customers’ details, failed to report cash transactions over R25 000 to the FIC, and did not have adequate controls and methods for reporting suspicious and unusual transactions.

READ MORE: KPMG exec embroiled in VBS probe

The report did note however that the decision to impose administrative sanctions was not based on evidence that either bank has facilitated money-laundering or the financing of terrorism.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

Related stories


press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday