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By BR reporter 
April 2, 2021
The South African Reserve Bank (SARB) has imposed administrative sanctions on Discovery Life Limited (Discovery Life) and has ordered the life insurer to take corrective action.
The SARB found weaknesses in the life insurer’s money laundering control measures after an inspection carried out in April 2019 in terms of Law 38 of 2001 of the Financial Intelligence Center (FIC Law).
The FIC Law, in terms of section 45, obliges the Prudential Authority (PA) within the SARB to supervise and enforce the provisions of the FIC Law with respect to the responsible institutions (AI) it supervises. As a result of these responsibilities, the Palestinian Authority, among other things, inspects AIs to assess whether they have appropriate and adequate measures and money laundering / terrorist financing controls that enable them to effectively comply with the provisions of the FIC Act.
It should be noted that the administrative sanctions were imposed for weaknesses identified in Discovery Life’s compliance with the provisions of the FIC Law, and not because said life insurer had facilitated money laundering or terrorist financing transactions.
The administrative sanctions imposed in terms of section 45C (3) of the FIC Law are a total financial sanction of R1.5 million (excluding an amount of R500,000 that is suspended for three years).
The financial sanction imposed on Discovery Life is derived from the following infractions of the FIC Law:
a. Discovery Life did not meet the cash threshold reporting (CTR) requirements in terms of section 28 of the FIC Act. The Palestinian Authority imposed a warning not to repeat the conduct that led to the breach in terms of section 45C (3) (a) of the FIC Act. In addition, a financial penalty of R500,000, suspended for three years, was imposed on Discovery Life in terms of section 45C (3) (e) of the FIC Act.
B. Discovery Life did not meet the requirements of the Risk Management and Compliance Program (RMCP) in terms of section 42 of the FIC Act. The Palestinian Authority imposed a warning not to repeat the conduct that led to the non-compliance in terms of section 45C (3) (a) of the FIC Act. The Palestinian Authority also imposed a financial penalty of R500,000 on Discovery Life in terms of section 45C (3) (e) of the FIC Act.
C. Discovery Life did not meet the anti-money laundering / anti-terrorist financing (AML / CFT) training requirements in terms of section 43 of the FIC Act. The Palestinian Authority imposed a warning not to repeat the conduct that led to non-compliance in terms of section 45C (3) (a) of the FIC Act, as well as a financial penalty of R500,000 to Discovery Life in terms of section 45C ( 3) (e) of the FIC Law.
D. Discovery Life did not comply with the governance of AML / CFT compliance requirements in terms of section 42A (2) of the FIC Act. The Palestinian Authority imposed a warning not to repeat the conduct that led to the non-compliance in terms of section 45C (3) (a) of the FIC Act. In addition, a financial penalty of R500,000 was imposed on Discovery Life in terms of section 45C (3) (e) of the FIC Act.
Discovery Life is cooperating with the SARB and has agreed to the necessary measures to address the identified compliance deficiencies and control weaknesses.
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