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South African regulator fines Bank of Baroda for violation of corruption laws

South Africa's regulators fined India-based Bank of Baroda 11 million South African rand over the violation of anti-corruption and anti-money laundering rules in helping the Gupta family purchase the Optimum coal mine, Moneyweb reported Sept. 4.

An investigation conducted by Deloitte into the transaction and the deposits from various parties into a Gupta-owned Bank of Baroda account found that the lender failed to verify the source of funds of more than 2 billion rand of deposits, violating several anti-money laundering and know-your-customer provisions of the Financial Intelligence Centre, or FIC, Act.

The bank did not file FIC reports for deposits made into an account held by Tegeta Exploration and Resources Pty Ltd., which is controlled by the Gupta family, despite the amounts exceeding the prescribed threshold for such reports and did not identify related parties. Under the FIC Act, banks have to identify all parties involved in a transaction and verify the source of funds.

The Gupta family is said to have close ties to South African President Jacob Zuma, and has been accused of exerting influence over state affairs and the award of government contracts to Gupta-owned companies. Tegata completed the purchase of the Optimum mine in 2016 for 2.15 billion rand.

The Reserve Bank of South Africa had ordered the probe after the allegations came to light.

As of Sept. 4, US$1 was equivalent to 12.98 South African rand.