The Reserve Bank initially imposed a R11-million fine but this was reduced to R400,000 after the bank appealed in court.
The Sandton branch of the Indian bank was one of the few institutions that provided services to the controversial Gupta business family, after South Africa’s big banks dumped their companies.
(From Daily Maverick archives: See #GuptaLeaks: How Bank of Baroda’s misadventures dragged it into South Africa’s political crisis)
Pravin Gordhan, then finance minister, in 2016 sought a court order stating that he could not prevent South African banks from firing the Gupta companies as clients. His application contained information about 72 reports of suspicious transactions totalling R6.8-billion that implicated members of the Gupta family and their companies.
The administrative sanction was imposed on Bank of Baroda by the SARB’s Prudential Authority, following an assessment of the bank’s practices. The Prudential Authority in 2016 followed up on a 2014 inspection that found deficiencies relating to compliance with financial intelligence laws, and weaknesses in controls to counter potential money-laundering and terrorist financing, according to the SARB.
Baroda was instructed, following the 2014 inspection, to rectify the weaknesses.
“In 2016, the PA conducted a follow-up inspection, following which it was found that some deficiencies in controls remained, thus impacting on the ability of Bank of Baroda to ensure compliance with the FIC Act,” according to a SARB statement.
The deficiencies in controls related mainly to Bank of Baroda’s processes for the reporting of transactions as required by the FIC Act. Bank of Baroda lodged an appeal, which reached the High Court in Pretoria. The fine was effectively reduced to R400,000. DM