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Financial services regulators lay some smack down as potential greylisting removal date approaches

Financial services regulators lay some smack down as potential greylisting removal date approaches
Neesa Moodley
By Neesa Moodley
7 Oct 2024
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As June 2025 approaches and with it hopes of South Africa being removed from the Financial Action Task Force greylist, local regulators and financial services authorities are taking swifter, more visible action to clamp down on illegal activities in the sector.

Read more: Treasury cautiously optimistic that SA will brave ‘tough challenge’ to get off FATF greylist

The Financial Sector Conduct Authority (FSCA) and the South African Reserve Bank are taking no prisoners in their quest to clean up the sector.

Most recently, the FSCA withdrew the licence of Global and Local Investment Advisors and barred Michael Haldane and Mauro Forlin for 30 years, following a lengthy investigation into the BHI Trust, which was revealed to be nothing more than a Ponzi scheme.

Read more: Investments in BHI Trust at risk following arrest of fund manager for fraud

The FSCA investigation confirmed that Global and Local, Haldane and Forlin conducted financial services with the BHI Trust, which had conducted financial services activities despite not being an authorised financial services provider (FSP).

Kingpin Craig Warriner took a plea deal last May and received a 25-year prison sentence for 206 counts of fraud and a charge of breaching the Financial Advisory and Intermediary Services Act by operating without an FSP licence.

Haldane and Forlin did not properly assess the appropriateness of the BHI Trust product in relation to its client risk profiles, which included pensioners with no other source of income.

Their 30-year debarment means they cannot:


  • Provide or be involved in the provision of financial services;

  • Act as a key person of a financial institution; or

  • Provide specified financial services to a financial institution, whether under outsourcing arrangements or otherwise.


Administrative sanctions


The FSCA imposed an administrative sanction of R1.1-million on Mika Finansiele Dienste (MFD) last week for failing to comply with the Financial Intelligence Centre (FIC) Act.

The objective of the FIC Act is, among other things, to help combat money laundering, the financing of terrorism and other related criminal activities. Monitoring, reporting and taking action for contraventions of the Act is key to removal of South Africa from the greylist.

Read more: BHI Trust scandal — former employer to sue Warriner while Investec pulls the plug

The FSCA conducted an inspection at MFD on 30 August 2022 and found that the company had failed to:

  • Develop, document, maintain and implement a risk management and compliance programme (RMCP) for anti-money laundering and counterterrorist financing. Although MFD had developed an RMCP, it failed to outline processes to comply with various provisions of the FIC Act. MFD also did not risk-rate most of its customers; and

  • Establish and verify the beneficial owner of a single client.


Because MFD cooperated with the investigation and is making efforts to comply, the FSCA has suspended R600,000 of the penalty for three years, provided that the deficiencies are addressed.

Prudential Authority admin sanctions on HSBC and Bidvest


In the same week (1 to 4 October 2024), the Prudential Authority of the Reserve Bank imposed administrative sanctions on HSBC and Bidvest Bank. HSBC received three cautions and a financial penalty totalling R9.5-million, of which R4-million is conditionally suspended for three years as from 10 June 2024.

HSBC’s transgressions of the FIC Act included deficiencies in the identification and verification of the beneficial owners of clients; failing to attend to automated transaction monitoring system alerts within the required 48 hours; and not adequately developing, documenting and/or implementing an RMC programme that would effectively enable it to identify and verify beneficial owners of clients.

Read more: Financial services offenders to pay up a collective R36.9m in sanctions this year

Bidvest Bank received a caution and a financial penalty of R5-million for failing to implement its RMC programme. Of this, R2.5-million is conditionally suspended for one year as from 23 August 2024.

The Prudential Authority of the Reserve Bank has also not held back this year when it comes to dishing out fines to financial services offenders. DM

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