Withdrawal of banking services by individual banks from Oakbay Investments

14 April 2016

There has been substantial speculation in the media about the decisions taken separately and independently by some banks to terminate their business relationships with Oakbay Investments. It is incumbent on The Banking Association South Africa (BASA) to make the following points in order to stop such speculation:

1. Each bank considered the actions taken by banks separately, with total respect for client confidentiality and all relevant regulations.

2. Banks are one of the most stringently regulated businesses in the country because they hold public deposits in trust and must conduct business in a manner that does not introduce risks into the economy.

3. Amongst the array of regulations banks must be governed by are those related to the current Financial Intelligence Centre Act, impending amendments to this Act and anti-money laundering regulations.

4. Clients of banks must also follow regulations related to these aspects, and it is incumbent on a bank to ensure its clients do abide by these regulations.

5. These regulations make it incumbent on banks to conduct a detailed due diligence on clients, particularly those of a substantive nature and those that are in the public domain. Such due diligence is conducted on an ongoing basis to ensure the bank is aware of any significant changes in the affairs of the client, particularly to satisfy itself that a client is abiding by FICA regulations and anti-money laundering regulations.

6. A bank will take these matters into account when considering ongoing relationships with clients, and will take appropriate action, based on the circumstances.

According to Cas Coovadia, MD of The Banking Association South Africa, “the Association is issuing this statement to explain, in general terms, regulatory considerations banks would undertake in assessing client relationships. Each bank will also consider its own business model, risk models and other matters specific to that bank’s business in making such decisions.”

The Banking Association South Africa

The role of The Banking Association is to facilitate the enablement of a conducive banking environment through robust engagement with government and relevant stakeholders. A critical role of The Banking Association is to work with its members to enable this role within the context of the transformation challenges prevailing in South Africa. For more on The Banking Association South Africa visit –www.banking.org.za

Issued by Cas Coovadia, MD of The Banking Association South Africa, 14 April 2016