RSK4802
Assignment 1 2025
Unique #:
Due Date: 29 May 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
KEY RISKS THAT THE BANK MAY FACE AS A RESULT OF ITS NON-
COMPLIANCE WITH THE STATUTES
Capitec Bank’s non-compliance with the Financial Intelligence Centre Act (FIC
Act) exposes the institution to several serious risks.
Regulatory risk.
The administrative sanctions, cautions, reprimands, and substantial financial
penalties (over R56 million) highlight the risk of further regulatory scrutiny. Non-
compliance could also result in the withdrawal of licenses or harsher penalties if
repeated in the future.
Reputational risk.
Financial institutions depend heavily on public trust, and sanctions from the South
African Reserve Bank (SARB) damage the credibility and reliability of Capitec in
the eyes of customers, investors, and business partners. A damaged reputation
could lead to loss of market share and customer attrition.
Financial risk.
Beyond the immediate fines, non-compliance increases costs related to
remediation, hiring compliance experts, upgrading systems, and potential future
litigation. The impact on profitability can be significant over the longer term.
Operational risk
Capitec’s failure to timely report suspicious transactions and attend to alerts
within prescribed periods points to weaknesses in internal processes, systems,
and risk management frameworks. Such weaknesses expose the bank to the
possibility of facilitating financial crimes like money laundering, potentially leading
to even bigger legal consequences.
Therefore, these risks—regulatory, reputational, financial, and operational—are
interconnected and could threaten Capitec’s future stability if not swiftly
addressed. The need for urgent corrective actions and a stronger compliance
culture has become essential to safeguard the institution.
Varsity Cube 2025 +27 81 278 3372
Assignment 1 2025
Unique #:
Due Date: 29 May 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1
KEY RISKS THAT THE BANK MAY FACE AS A RESULT OF ITS NON-
COMPLIANCE WITH THE STATUTES
Capitec Bank’s non-compliance with the Financial Intelligence Centre Act (FIC
Act) exposes the institution to several serious risks.
Regulatory risk.
The administrative sanctions, cautions, reprimands, and substantial financial
penalties (over R56 million) highlight the risk of further regulatory scrutiny. Non-
compliance could also result in the withdrawal of licenses or harsher penalties if
repeated in the future.
Reputational risk.
Financial institutions depend heavily on public trust, and sanctions from the South
African Reserve Bank (SARB) damage the credibility and reliability of Capitec in
the eyes of customers, investors, and business partners. A damaged reputation
could lead to loss of market share and customer attrition.
Financial risk.
Beyond the immediate fines, non-compliance increases costs related to
remediation, hiring compliance experts, upgrading systems, and potential future
litigation. The impact on profitability can be significant over the longer term.
Operational risk
Capitec’s failure to timely report suspicious transactions and attend to alerts
within prescribed periods points to weaknesses in internal processes, systems,
and risk management frameworks. Such weaknesses expose the bank to the
possibility of facilitating financial crimes like money laundering, potentially leading
to even bigger legal consequences.
Therefore, these risks—regulatory, reputational, financial, and operational—are
interconnected and could threaten Capitec’s future stability if not swiftly
addressed. The need for urgent corrective actions and a stronger compliance
culture has become essential to safeguard the institution.
Varsity Cube 2025 +27 81 278 3372
