{"id":23675,"date":"2025-03-27T04:53:21","date_gmt":"2025-03-27T05:53:21","guid":{"rendered":"https:\/\/www.premium-partners.net\/?p=23675"},"modified":"2025-03-27T05:56:14","modified_gmt":"2025-03-27T05:56:14","slug":"us-takes-firm-stand-to-eliminate-reputational-risk-in-banking-stirring-debate-in-south-africa","status":"publish","type":"post","link":"https:\/\/www.premium-partners.net\/fr\/builder\/us-takes-firm-stand-to-eliminate-reputational-risk-in-banking-stirring-debate-in-south-africa\/","title":{"rendered":"US takes firm stand to eliminate reputational risk in banking, stirring debate in South Africa"},"content":{"rendered":"

This post<\/a> was originally published on this site<\/a><\/p>

<\/p>\n

The US has taken a bold step that South Africa\u2019s banking regulators can no longer ignore: stripping “reputational risk” from federal banking oversight.<\/p>\n

The US Banking Committee announced this week that the Federal Deposit Insurance Corporation (FDIC) will eliminate reputational risk as a factor in bank supervision, following the passage of Senator Tim Scott\u2019s Financial Integrity and Regulation Management (FIRM) Act. The legislation aims to scrap this concept across all federal banking regulators.<\/p>\n

The move comes as two of US President Donald Trump\u2019s family organisations sue Capital One for closing their accounts after the January 2021 Capitol riots. The Trump Organisation called it an assault on free speech and free enterprise, alleging the decision stemmed from Trump\u2019s political views. On FOX News, Scott labelled reputational risk a \u201cplaybook strategy\u201d and \u201chogwash\u201d, arguing it\u2019s a tool regulators use to claim banks might lose market value by associating with crypto or prominent political figures. \u201cIt\u2019s merely a weaponisation of their rules,\u201d he said.<\/p>\n

In South Africa, reputational risk has been a go-to excuse for banks shutting down accounts of individuals and businesses. The Gupta empire crumbled largely because local banks cut ties with their businesses, leaving India\u2019s Bank of Baroda as a temporary lifeline. Bell Pottinger, a controversial PR firm, lost its HSBC contract after running a racially charged campaign in South Africa. Yet, South African banks faced Parliament\u2019s wrath last month over lack of transformation, discriminatory practices, and account closures.<\/p>\n

Ongoing court cases see individuals and businesses challenging account closures based solely on reputational risk, arguing it\u2019s applied unfairly. High-profile figures like Duduzane Zuma, son of former President Jacob Zuma, and ex-Eskom CEO Matshela Koko have publicly decried being debanked.<\/p>\n

Sekunjalo Group, despite no proven wrongdoing, faces banks attempting to sever ties amid legal battles. \u201cThe US has seen how banks used \u2018reputational risk\u2019 for political purposes and will now eliminate this from banking supervision. South Africa must follow through with similar legislation,\u201d said Sekunjalo chairman Dr Iqbal Surv\u00e9 on Wednesday on X.<\/p>\n

The South African Reserve Bank, which oversees the industry, offered no comment on potential regulatory changes. The Banking Association South Africa also dodged the issue, stating, \u201cThe closure of bank accounts is a matter between individual banks and their customers. Any queries should be directed to the individual banks concerned.\u201d<\/p>\n

Crypto-related businesses, like Luno, have borne the brunt of this practice. South Africa\u2019s lack of cryptocurrency regulation, compounded by its Financial Action Task Force grey-listing in February 2023 for weak anti-money laundering and counter-terrorism financing measures, hasn\u2019t helped. Luno declined to comment on the FIRM Act, but its global head of compliance, Johan Hetzel, recently dismissed the notion that crypto is for criminals as \u201coutdated and wrong\u201d.<\/p>\n

He argued crypto platforms face scrutiny akin to traditional finance, even leading in areas like the Travel Rule regulation.<\/p>\n

Nathan McCauley, the CEO of US-based Anchorage Digital, posted on X: \u201cThe FIRM Act tackles a major issue: debanking. We\u2019ve seen firsthand how \u2018reputational risk\u2019 can be used to deny banking services without due process. This bill is a crucial step towards fair access to banking.\u201d<\/p>\n

South Africa\u2019s banking sector remains under scrutiny. While the US moves to curb reputational risk as a weapon, local regulators and banks stay silent, leaving individuals, businesses, and crypto traders in limbo, battling closures they see as unjust.<\/p>\n

BUSINESS REPORT<\/strong><\/p>","protected":false},"excerpt":{"rendered":"

The US has taken a bold step that South Africa\u2019s banking regulators can no longer ignore: stripping “reputational risk” from federal banking oversight.The US Banking Committee announced this week that the Federal Deposit Insurance Corporation (FDIC) will eliminate reputational risk as a factor in bank supervision, following the passage of Senator Tim Scott\u2019s Financial Integrity and Regulation Management (FIRM) Act. The legislation aims to scrap this concept across all federal banking regulators.The move comes as two of US President Donald Trump\u2019s family organisations sue Capital One for closing their accounts after the January 2021 Capitol riots. The Trump Organisation called it an assault on free speech and free enterprise, alleging the decision stemmed from Trump\u2019s political views. On FOX News, Scott labelled reputational risk a \u201cplaybook strategy\u201d and \u201chogwash\u201d, arguing it\u2019s a tool regulators use to claim banks might lose market value by associating with crypto or prominent political figures. \u201cIt\u2019s merely a weaponisation of their rules,\u201d he said.In South Africa, reputational risk has been a go-to excuse for banks shutting down accounts of individuals and businesses. The Gupta empire crumbled largely because local banks cut ties with their businesses, leaving India\u2019s Bank of Baroda as a temporary lifeline. Bell Pottinger, a controversial PR firm, lost its HSBC contract after running a racially charged campaign in South Africa. Yet, South African banks faced Parliament\u2019s wrath last month over lack of transformation, discriminatory practices, and account closures.Ongoing court cases see individuals and businesses challenging account closures based solely on reputational risk, arguing it\u2019s applied unfairly. High-profile figures like Duduzane Zuma, son of former President Jacob Zuma, and ex-Eskom CEO Matshela Koko have publicly decried being debanked.Sekunjalo Group, despite no proven wrongdoing, faces banks attempting to sever ties amid legal battles. \u201cThe US has seen how banks used \u2018reputational risk\u2019 for political purposes and will now eliminate this from banking supervision. South Africa must follow through with similar legislation,\u201d said Sekunjalo chairman Dr Iqbal Surv\u00e9 on Wednesday on X.The South African Reserve Bank, which oversees the industry, offered no comment on potential regulatory changes. The Banking Association South Africa also dodged the issue, stating, \u201cThe closure of bank accounts is a matter between individual banks and their customers. Any queries should be directed to the individual banks concerned.\u201dCrypto-related businesses, like Luno, have borne the brunt of this practice. South Africa\u2019s lack of cryptocurrency regulation, compounded by its Financial Action Task Force grey-listing in February 2023 for weak anti-money laundering and counter-terrorism financing measures, hasn\u2019t helped. Luno declined to comment on the FIRM Act, but its global head of compliance, Johan Hetzel, recently dismissed the notion that crypto is for criminals as \u201coutdated and wrong\u201d.He argued crypto platforms face scrutiny akin to traditional finance, even leading in areas like the Travel Rule regulation.Nathan McCauley, the CEO of US-based Anchorage Digital, posted on X: \u201cThe FIRM Act tackles a major issue: debanking. We\u2019ve seen firsthand how \u2018reputational risk\u2019 can be used to deny banking services without due process. This bill is a crucial step towards fair access to banking.\u201dSouth Africa\u2019s banking sector remains under scrutiny. While the US moves to curb reputational risk as a weapon, local regulators and banks stay silent, leaving individuals, businesses, and crypto traders in limbo, battling closures they see as unjust.BUSINESS REPORT<\/p>","protected":false},"author":1,"featured_media":12693,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-23675","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-builder"],"_links":{"self":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/23675","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/comments?post=23675"}],"version-history":[{"count":1,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/23675\/revisions"}],"predecessor-version":[{"id":23676,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/posts\/23675\/revisions\/23676"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media\/12693"}],"wp:attachment":[{"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/media?parent=23675"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/categories?post=23675"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.premium-partners.net\/fr\/wp-json\/wp\/v2\/tags?post=23675"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}