The largest banks in the nation have been alerted by the Prudential Authority of the South African Reserve Bank (SARB) that they run a significant danger of being used for the financing of terrorism and money laundering.
The warning comes as South Africa has been informed that due to deficiencies in combating illicit crime, it may be included in a global “grey list” of countries that demand stricter scrutiny.
The banking industry in South Africa is generally considered to be at high risk for money laundering, financing of terrorism, and proliferation financing (funding of nuclear or chemical weapons and their components), according to the Prudential Authority (PA). However, the greatest risk is concentrated at the top, among the five largest banks.
The biggest banks in the nation carry the most risk because they have the highest client concentration (they own 89% of the banking industry’s total assets). But it’s not just a game of numbers.
The PA claimed that as a result, all high-risk clientele is exposed to the large banks. Because of the prevalence of digital onboarding and contact, banks frequently have little or no information about their customers, including their origin and personal information.
Additionally, “persons of influence” and high net worth individuals, who hold a lot of inherent risks associated with money laundering and terrorist funding due to their more complex banking practices, are another group to which the large banks are most exposed.
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