RSK4802 ASSIGNMENT O1 SEMESTER 1- 29 MAY 2025
Questions
1) Identify 4 keys risks that the bank may face as a result of its non- compliance with the
statutes as detailed in the article (8 marks).
2) Comment on the role and effectiveness of Capitec Bank’ Board in respect to its
responsibilities on compliance issues. (7marks).
3) What could be some of the board’s short comings with respect to enforcement of
compliance issues and what can be done to remedy this?(10 marks)
FOR EXAMS, PORTFOLIO, AND ASSIGNMENT ASSISTANCE WHATSAPP
083 286 8465 EMAIL:
, 1. Identify 4 keys risks that the bank may face as a result of its non-
compliance with the statutes as detailed in the article (8 marks).
1.1 Regulatory and legal risk
Capitec’s breaches of sections 21, 28, 29 and 42 of the FIC Act have already
resulted in a R56.25 million administrative sanction, and the Prudential Authority (PA)
has warned of further action if deficiencies persist (SARB 2024). Continued non-
compliance therefore exposes the bank to additional penalties, licence conditions
and even criminal proceedings against directors.
The public announcement of sanctions damages Capitec’s image as an ethical, low-
fee retail bank. Negative stakeholder perceptions can trigger deposit outflows, raise
the cost of wholesale funding, and hinder customer acquisition illustrating how poor
AML performance translates into reputational fallout (RSK4802 Study Guide).
1.2 Operational/AML-CFT risk
Weak customer due diligence (CDD) files, inadequate beneficial ownership
verification and slow suspicious-transaction reporting (STR) increase the likelihood
that illicit funds will move undetected through the bank. This elevates the probability
of asset seizures, correspondent-banking restrictions, and costly remediation
projects.
1.3 Strategic and capital-adequacy risk
Penalties, remediation spending and a potential capital add-on required by
regulators place pressure on Capitec’s cost-leadership model and may delay
strategic initiativessuch as expanding its business-banking segment until the PA is
satisfied that the risk-management and compliance programme (RMCP) is fully
embedded.
2. Comment on the role and effectiveness of Capitec Bank’ Board in
respect to its responsibilities on compliance issues. (7marks).
2.1. Positive indicators of oversight
The Board cooperated with the PA, accepted the sanctions without litigation and
approved a remediation plan credible enough for part of the fine to be conditionally
suspended. These steps demonstrate post-event accountability and an intent to
Questions
1) Identify 4 keys risks that the bank may face as a result of its non- compliance with the
statutes as detailed in the article (8 marks).
2) Comment on the role and effectiveness of Capitec Bank’ Board in respect to its
responsibilities on compliance issues. (7marks).
3) What could be some of the board’s short comings with respect to enforcement of
compliance issues and what can be done to remedy this?(10 marks)
FOR EXAMS, PORTFOLIO, AND ASSIGNMENT ASSISTANCE WHATSAPP
083 286 8465 EMAIL:
, 1. Identify 4 keys risks that the bank may face as a result of its non-
compliance with the statutes as detailed in the article (8 marks).
1.1 Regulatory and legal risk
Capitec’s breaches of sections 21, 28, 29 and 42 of the FIC Act have already
resulted in a R56.25 million administrative sanction, and the Prudential Authority (PA)
has warned of further action if deficiencies persist (SARB 2024). Continued non-
compliance therefore exposes the bank to additional penalties, licence conditions
and even criminal proceedings against directors.
The public announcement of sanctions damages Capitec’s image as an ethical, low-
fee retail bank. Negative stakeholder perceptions can trigger deposit outflows, raise
the cost of wholesale funding, and hinder customer acquisition illustrating how poor
AML performance translates into reputational fallout (RSK4802 Study Guide).
1.2 Operational/AML-CFT risk
Weak customer due diligence (CDD) files, inadequate beneficial ownership
verification and slow suspicious-transaction reporting (STR) increase the likelihood
that illicit funds will move undetected through the bank. This elevates the probability
of asset seizures, correspondent-banking restrictions, and costly remediation
projects.
1.3 Strategic and capital-adequacy risk
Penalties, remediation spending and a potential capital add-on required by
regulators place pressure on Capitec’s cost-leadership model and may delay
strategic initiativessuch as expanding its business-banking segment until the PA is
satisfied that the risk-management and compliance programme (RMCP) is fully
embedded.
2. Comment on the role and effectiveness of Capitec Bank’ Board in
respect to its responsibilities on compliance issues. (7marks).
2.1. Positive indicators of oversight
The Board cooperated with the PA, accepted the sanctions without litigation and
approved a remediation plan credible enough for part of the fine to be conditionally
suspended. These steps demonstrate post-event accountability and an intent to
