The Prudential Authority (PA) imposed administrative sanctions on HBZ Bank Limited (HBZ) due to its non-compliance with certain FIC Act provisions.
The said sanctions were imposed after an inspection was conducted on HBZ in 2022 as part of the FIC Act’s section 45B. Among the financial inadequacies that HBZ Bank committed was the failure to comply with customer due diligence and fulfill its record-keeping obligations.
This TRU Insight provides you with all the details regarding the sanction, plus information about the parties involved.
HBZ Bank Limited Overview
HBZ Bank South Africa is a bank that is a subsidiary of Habib Bank AG Zurich. Established in 1967 in Switzerland, Habib Bank AG Zurich has grown with a global presence in 11 countries across four continents.
Among all these areas, HBZ Bank Limited was established in 1995. It developed a substantial footprint in South Africa, particularly in Gauteng and KwaZulu-Natal.
Being fully owned by Habib Bank AG Zurich as a subsidiary, HBZ Bank Limited upholds Swiss traditions while adhering to South African regulations and the Reserve Bank’s guidelines.
It focuses on providing commercial banking facilities to businesses operating in industrial sectors, including:
- Property
- Retail
- Wholesale
- Manufacturing
HBZ Bank forex and other financial solutions also include:
- Trade finance services
- Long- and short-term financing
- Deposit and investment accounts
Besides these services, this South African bank also caters to clients seeking financial services that comply with Shariah. Hence, it offers Islamic financing products, including Murabaha (trade finance) and Diminishing Musharakah (Property & Asset Finance).
Read More: Halal Forex Trading: Is Islamic Trading Permissible in 2025?
Administrative Sanctions Imposed on HBZ Bank Limited
HBZ Bank was one of three banks in South Africa that the Prudential Authority sanctioned in the first half of 2025—the other two banks being Bank of Taiwan and Citibank.
The administrative sanctions were given due to failure to abide by the Financial Intelligence Centre (FIC) Act. HBZ fell short in its compliance concerning its customer due diligence, record-keeping obligations, Risk Management and Compliance Programme (RMCP) implementation, to name a few.
These sanctions do not necessarily mean that the banks were involved in a criminal act. Rather, their compliance systems need improvement.
Fortunately, the Prudential Authority notes that all three banks cooperated and took remedial actions to address the deficiencies and manage them accordingly.
Nonetheless, the administrative sanctions imposed on HBZ Bank Limited involve three cautions against repeating the conduct. This eventually led to non-compliance, as well as two reprimands and a penalty amounting to R9 million.
Of the financial penalty, R1.5 million is conditionally suspended for two years as from March 5, 2025.
In light of this, the South African Reserve Bank (SARB) issued a Media Release on June 20, 2025, to provide the specific details surrounding the sanctions:
According to the Prudential Authority, the administrative sanctions were given to HBZ Bank for several reasons, including:
Failure to Comply with Customer Due Diligence
In addition to failing to conduct Customer Due Diligence (CDD), HBZ Bank Limited also failed to adequately exercise enhanced due diligence on five active high-risk-rated and 18 active medium-risk-rated client files.
The PA sent a caution to HBZ Bank not to repeat the conduct. Eventually, it led to the bank’s non-compliance. While the PA also imposed a R6-million financial penalty, R1 million of it was conditionally suspended.
Failure to Keep Records
Besides CDD, HBZ Bank Limited also failed to keep records of one of its high-risk trade finance clients when it was active and after the relationship was terminated.
The PA issued a caution against repeating the action, which resulted in non-compliance and a formal reprimand.
Failure to Comply with FIC Act’s Section 42
HBZ Bank Limited failed to comply with Section 42 of the FIC Act by not being able to perform the following functions:
- Executing its Risk Management and Compliance Programme (RMCP) on its CDD and record-keeping obligations
- Providing a precise or confirmed residual risk rating for trade finance as a transaction type
- Implementing its RMCP on seven of the advanced payment transactions assessed
- Providing a document rationale for concluding that trade finance is a transaction type assigned with an inherent risk rating of “medium” in terms of its business model
Although the Prudential Authority imposed a caution for HBZ Bank to not repeat the conduct, it led to non-compliance, a reprimand, and a financial penalty worth R3 million. Of this penalty, R500,000 was conditionally suspended.
What is Prudential Authority and Why Does It Matter?
The Prudential Authority (PA) is responsible for supervising and enforcing compliance by accountable financial institutions with the FIC Act provisions.
As part of the South African Reserve Bank (SARB), it oversees financial institutions like banks and insurers to protect the soundness of the financial industry and maintain economic stability.
The PA complies with the FIC Act to ensure financial service providers prevent money laundering. To do this, the PA mandates robust internal controls and reporting of suspicious transactions.
The need for PA is greater than ever in South Africa since the country was included in the Financial Action Task Force (FATF) greylist in 2023.
The said list includes “jurisdictions under increased monitoring,” identifying countries with deficiencies in their counter-terrorist financing (CTF) and anti-money laundering (AML) regimes. The FTAF works with these countries and helps them address these weaknesses.
Among these countries, South Africa sees a rise in administrative sanctions imposed on its major financial service providers, including Capitec, Absa, and Standard Bank.
Read more: The ‘FACEBK Scam’ and How to Protect Yourself from It – TradersUnited
So, the new sanctions against Citibank, HBZ Bank Limited, and Bank of Taiwan all link to failures in compliance with certain provisions in the FIC Act.
Here’s How Prudential Authority Helps Investors
Our experts dig deeper into the Prudential Authority (PA) to determine how it helps investors. Based on their findings, the PA is a significant capital allocator in financial markets.
The sanctioning authority applies a Responsible Investment Policy as part of its efforts to generate long-term returns on investors’ assets. The purpose of the policy is to state the company’s expectations regarding responsible investment and guide local businesses and asset managers.
The Prudential Authority also aims to uphold responsible investment by committing to an inclusive transition to a low-carbon economy. Hence, it considers Environmental, Social, and Governance (ESG) as important elements of good investment and aims to manage ESG risks through its policy.
Read more: What is ESG Investing? Its Purpose and How to Make Impact – TradersUnited
Based on their regulatory strategy, the Prudential Authority aims to help investors through proposed regulatory and supervisory functions, such as:
Build Cross-Sectoral Regulation
The PA aims to create regulatory instruments to harmonize requirements across various industries.
To help investors, the PA plans to create foundation requirements for each financial sector that will serve as the basis for promoting the proper culture to address specific risk areas, such as:
- Information technology
- Governance
- Operational risks
Enhance AML/CTF Strategies
The sanctioning authority aims to enhance financial service providers’ risk-based approaches to anti-money laundering and counter-terrorist financing supervision.
To do this, the Prudential Authority plans to develop and improve new risk-based tools to assess AMT/CTF risks in subsidiaries, banks, and life insurers.
Develop a Prudential Regulation Approach
The PA aims to develop an effective approach to regulating pension funds, investment schemes, and medical schemes, to name a few.
It aims to establish a clear understanding of the risks associated with financial institutions and articulate their approach to regulating these institutions and mitigating risks.
It also sets out plans to identify the areas that must be included in new regulatory instruments and propose changes to existing legislation and regulatory instruments.
Is HBZ Bank Still Safe?
HBZ Bank Limited has established a significant presence in South Africa as a licensed financial services provider under the Financial Advisory and Intermediary Services Act.
As a registered credit provider under the National Credit Act, HBZ Bank Limited abides by stringent regulatory standards. It is committed to ensuring the delivery of efficient, secure, and innovative banking solutions to its clients.
Thanks to its global heritage and local expertise, HBZ Bank Limited continues to support its clients’ growth by offering financial services tailored to their diverse needs.
Although the PA filed sanctions against HBZ Bank along with Citibank and the Bank of Taiwan, it is not criminal in nature. Rather, it merely aims to signal weaknesses in the bank’s compliance processes. They must work on these issues to align with legal requirements.
The Prudential Authority confirmed that the three banks cooperated fully during their inspections and have since committed to remedial actions. In particular, HBZ Bank addressed the deficiencies by:
- Strengthening compliance frameworks
- Revising internal policies
- Increasing staff training in AML/CTF procedures
On that note, our financial experts pointed out that the administrative sanctions may have affected the reputational risk for HBZ Bank Limited.
However, they added that the proactive cooperation and remedial action demonstrated by the bank helped restore regulatory trust and mitigate the long-term impacts of the sanctions.
Discover the Importance of Regulatory Engagement
Financial institutions continue to adjust to the evolving compliance landscape of regulatory bodies. Not only does this influence investors’ trust, but it also puts a renewed emphasis on risk management and internal control for all financial institutions.
Learn the importance of keeping up with regulations to keep your investments safe. Join millions of expert traders and explore which financial service providers comply with legal and financial regulations, and which ones fail to sustain their operational legitimacy.
FAQs
How do I access the HBZ Bank Login?
Logging in to HBZ Bank is easy. Just follow these steps:
- Go to the HBZ Bank website and click on the “Internet Account Access” button.
- Log in with the login name and password from your sealed PIN mailer.
- Enter the 5-digit challenge digits shown in the specified field. This security feature is necessary to prevent automated processes from accessing your HBZ Bank web passwords.
- If the 5-digit challenge does not appear, do not enter any more details. Instead, close the screen and log in again.
What are sanctions in the banking sector?
Sanctions are meant to address misconduct by a supervised bank. They function as deterrents to the bank in question as well as to the entire banking sector.
Regulatory authorities can initiate sanction proceedings either during ongoing breaches or after the breach has ended, provided that they respect the limitation period.
Who is the CEO of HBZ Bank?
Muhammad H. Habib is the appointed President and Chief Executive Officer (CEO) of Habib Bank AG Zurich. With nearly four decades of experience in banking, he initially became a member of the bank’s General Management team.
Learn How Regulations Affect Financial Service Providers Like HBZ Bank
Financial institutions like HBZ Bank Limited require top-tier supervision from authorities like the Prudential Authority (PA).
It allows them to ensure the stability of the financial industry, protect their clients’ interests, and prevent financial crimes. By abiding by regulations, financial institutions maintain public trust in the banking system and mitigate the risks associated with bank failures.
Learn our experts’ insights on the top banks regulated by tier-one regulatory bodies. Share your experiences and ask questions to fellow traders in a verified online trading community.
With a team of professionals to keep financial risks at bay, you’ll surely find innovative ways to protect your investments from incompetent and unregulated financial institutions.
