Fund managers fined

FIRSTRAND SUBSIDIARY: FINANCIAL INTELLIGENCE CENTRE ACT BREACHES

Violations relate to combating money laundering, terrorism financing.

The Financial Sector Conduct Authority (FSCA) has imposed an administrative sanction of R16 million on Ashburton Fund Managers for failing to comply with the Financial Intelligence Centre Act.

Ashburton, a subsidiary of FirstRand Limited, is a licensed financial services provider under the Financial Advisory and Intermediary Services Act and an accountable institution under the Financial Intelligence Centre (Fica).

FSCA is responsible for enforcing compliance with Fica to combat money laundering, the financing of terrorism and related criminal activities. All accountable institutions must comply with its requirements.

When FSCA conducted an inspection at Ashburton between 17 October and 15 November, 2022, it found the fund manager had breached these provisions of the Act by not developing, documenting, maintaining and implementing a risk management and compliance programme for anti-money laundering and counterterrorist financing. The programme was developed, but did not set out how it would comply regarding:

Examining unusually large transactions and unusual patterns of transactions;

Performing customer due diligence when it’s suspected that a transaction or activity is suspicious or unusual as contemplated in Section 29;

Terminating existing business relationships as contemplated in Section 21E;

Enabling Ashburton to determine when a transaction or activity is reportable to Fica; and The implementation of its programme.

The FSCA also found that Ashburton did not identify and verify the identity of clients, the persons acting on behalf of clients and clients acting on behalf of someone else when it engaged with a prospective client to enter into a single transaction or business relationship.

The fund manager also did not establish the nature of some clients’ business, their ownership and control structure and the identity of the beneficial owners of clients.

FSCA also said accountable institutions are required to scrutinise client information to determine if they are listed in terms of Section 25 of the Protection of Constitutional Democracy Against Terrorist and Related Activities Act and the Targeted Financial Sanctions Lists issued by the UN Security Council. Ashburton had failed to screen its clients.

In recognition of the remedial action Ashburton has taken, FSCA suspended R6 million of the penalty for three years. FSCA directed Ashburton to pay R10 million by this past Wednesday. –