Backlash as Reserve Bank keeps mum on Capitec’s suspended portion of fine

The South African Reserve Bank (SARB) has been criticised for remaining mum on whether the central bank will require Capitec to pay a suspended portion of a fine after the commercial lender was allegedly found to be a repeat offender.

Of concern is R10.5-million which was suspended conditionally when the SARB in December 2024 imposed a total fine of R56.25-million on Capitec for offences committed by the lender in 2021 and 2022.

When issuing the fine in 2024, the Reserve Bank said the sanctions consisted of seven cautions, one reprimand and a financial penalty, of which R10.5-million was suspended on condition that Capitec did not commit the same offence for a period of 36 months from July 30 2024.

The administrative sanctions were imposed after SARB inspections conducted in 2021 and 2022. The 2021 inspection focused on the retail banking segment, while the 2022 inspection focused on the business banking segment.

The inspection found that Capitec had failed to comply with certain provisions of the Financial Intelligence Centre Act (FIC Act) in that it failed to adequately conduct customer due diligence, enhanced due diligence and ongoing due diligence in respect of the sampled client files, read the SARB 2024 media statement.

For this particular offence, the authority imposed a caution not to repeat the conduct that led to the non-compliance, as well as a financial penalty of R20-million for the retail segment, of which R5-million was conditionally suspended for a period of 36 months.

For the business banking segment, it imposed a financial penalty of R15-million, of which R2-million was conditionally suspended for the same period.

This meant that the Reserve Bank suspended R7-million of the fine imposed in 2024 in relation to the offence.

However, in a media statement published last week, the Reserve Bank imposed a further R28-million fine on Capitec after finding that the financial services provider had once again, within the 36-month suspension period, failed to comply with certain provisions of the FIC Act, making it an alleged repeat offender.

According to SARB, Capitec was considered an alleged repeat offender after once again failing to fully comply with sections of the FIC Act by not conducting adequate enhanced due diligence on a sampled client file.

Last week’s Reserve Bank media statement also found that Capitec had failed to adequately conduct customer due diligence, enhanced due diligence and ongoing due diligence in respect of sampled client files. This finding formed part of the administrative sanctions imposed on Capitec in 2024 and resulted in R5 million of the fine being suspended.

When approached for comment, the Reserve Bank declined to state whether it would seek to have the suspended portion of the fine enforced.

The Reserve Bank said that, despite the Prudential Authority having publicly disclosed the administrative sanctions imposed on Capitec Bank in media statements issued on December 20 2024 and September 11 2026, it does not comment on supervisory engagements, enforcement follow-up, payment status or further regulatory steps relating to individual regulated institutions.

According to Capitec chief risk officer Ismail Moola, the bank has already begun addressing the identified shortcomings and continues to support South Africa’s efforts to meet international anti-money laundering standards.

“The bank has been engaging constructively with the regulator and is addressing all findings,” Moola said, adding that Capitec remains committed to strengthening its compliance framework.

“Both findings stem from distinct inspection periods and regulatory assessments. For technical details regarding the nature of the findings, the Prudential Authority as our primary regulator will be able to provide further information.”

However, the chairperson of Parliament’s Standing Committee on Finance, Dr Joe Maswanganyi, rejected the Reserve Bank’s response.

“The committee believes it is necessary [for the Reserve Bank to clear the air] because the Bank on its own publicly communicated the administrative penalty imposed on Capitec Bank in 2024.

“Its 2024 communication creates a legitimate expectation from other regulated institutions and the public because the same Capitec Bank is found to be in another contravention in the same period of a suspended penalty,” said Maswanganyi.

He said that, although the committee was not privy to the nuances surrounding the decision, on the face of it, if the Reserve Bank failed to enforce its sanctions this would send the wrong message to regulated financial institutions.

“This could simply be misconstrued as selective regulation, unless the bank explains publicly the reasons why such sanctions cannot be enforced.”

Maswanganyi said that while the committee ordinarily refrains from micro-managing the Reserve Bank’s day-to-day administrative operations because Section 224(2) of the Constitution guarantees the bank’s operational independence, this did not place the institution beyond parliamentary scrutiny.

“However, this is not to say that the committee cannot exercise its oversight authority on the bank, especially doing so in the public’s interest for accountability and transparency,” he said, adding that the committee may seek information on the matter during the bank’s next appearance before the committee.

Financial Services Sector analyst and chartered accountant Khaya Sithole said the public has a right to know whether the Reserve Bank will demand the suspended fines from Capitec as a repeat offender.

“For transparency reasons, it is quite important because if the Reserve Bank has said to the public that they should be receiving a particular amount but they have suspended it as an incentive for Capitec to do better, and when they don’t do better and they do a violation within the 36 month timeframe, the bank should [cite] the public harm, which is what the fine is trying to address,

“Once a letter of intent to issue a fine is submitted, then they [Capitec] either concede on the issue, and there is a process of negotiation around the penalty, and the Reserve Bank would have said they would only levy a part of the fine immediately, and then the rest is suspended on condition that you don’t do this again,” said Sithole.

He added that the Reserve Bank needs to clarify that the suspended fine would be payable immediately. “When somebody does this within 36 months, they should be classified as a repeat offender.”

Sithole further cautioned it was important for the Reserve Bank to enforce payment of the suspended fine to ensure that other offenders will know how to tow the line.