- FSCA: Sanlam’s anti-money laundering program failed to prevent real-world risks.
- Critical gaps: multiple clients and their beneficial owners are not properly screened or verified.
- R3.6 million suspended, but only if Sanlam shows full compliance after repeated failures.
Sanlam has been fined R10.6 million by the Financial Sector Conduct Authority (FSCA) for not following South Africa’s anti-money laundering laws.
The FSCA states that Sanlam Collective Investments (SCI) had systems in place for checking clients and spotting risky transactions that were either missing or not functioning correctly, leaving room for financial crime. “Sanlam had a risk program on paper,” the FSCA said, “but it wasn’t used properly. It didn’t perform its intended role.”
An inspection in March 2024 showed that SCI’s internal controls were weak and technically flawed. The FSCA found that SCI had not established proper procedures to review large or unusual transactions, end risky business relationships, or report suspicious activity. Even basic client checks were insufficient. Some clients and their beneficial owners had not been properly identified or verified, and the firm did not provide extra scrutiny for politically exposed persons.
“Proper due diligence is not optional,” the FSCA warned. “It’s how we keep criminals out of the financial system.” The regulator emphasized that SCI’s failures were not just technical; they posed a real risk to South Africa’s financial sector.
Repeat offenses and conditional leniency
This is not the first time SCI has faced trouble. The FSCA took previous violations into account, including a formal agreement SCI had to sign under the Financial Sector Regulation Act and a past penalty for violating the rules of the Collective Investment Schemes Control Act. These repeat offenses made the current R10.6 million penalty even more serious.
Still, the FSCA recognised that SCI has begun to address the problems. Because of this, R3.6 million of the fine will be suspended for two years, on the condition that SCI fully corrects its mistakes and remains compliant. If it makes another mistake, the suspended amount will be reinstated.
Sector-wide warning from the regulator
The FSCA made it clear that this penalty serves as a warning to the entire financial sector. “We will not tolerate non-compliance,” the regulator said. “All financial institutions must regularly review their systems and take anti-money laundering seriously.”
Institutions connected to international financial groups, like SCI, are expected to exercise even more caution. The FSCA stated that SCI’s size and complexity mean it has greater responsibility, and weak controls at this level put the entire financial system at risk.
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