Home South African Sars slaps Sasfin with R4.9bn damages claim over money laundering allegations

Sars slaps Sasfin with R4.9bn damages claim over money laundering allegations

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The South African Revenue Service Commissioner, Edward Kieswetter, said that the tax man has instituted legal proceedings against Sasfin Bank.

Sars has instituted legal proceedings against Sasfin Bank. Picture: Screen grab of Sasfin Bank website

THE SOUTH African Revenue Service (Sars) Commissioner, Edward Kieswetter, said on Tuesday that it has instituted legal proceedings against Sasfin Bank.

Sars said that it conducted a number of investigations into various SA taxpayers who had not made true and accurate tax disclosures to Sars.

“The investigation revealed that the taxpayers had colluded to expatriate funds offshore in a manner that obscured tracing the expatriated payments and jeopardises the recovery of tax in South Africa,” Sars said.

Sars noted that it is inappropriate to comment on the question of liability and compensation for the fiscus’ loss, as these are legal issues that are now before the South African judicial system.

Sasfin said in a statement on Tuesday that they can confirm that Sars has issued a summons against the bank for two damages claims of R1.97 billion and R2.9 billion.

“Sasfin Bank was served a civil summons for a total amount of R4,872,327,649. plus interest and costs in the form of a damages claim, instituted by Sars. This summons, which was received on 9 January 2024, arises from Sars’ purported inability to collect income tax, value added tax and penalties allegedly owed by former foreign exchange clients of the Bank,” according to the statement.

The bank said that former foreign exchange clients operated as a syndicate that ran an unlawful scheme to facilitate the expatriation of money out of South Africa and colluded with former employees of the bank who operated outside the scope of their employment.

“The Bank took decisive action when it became aware of this unlawful scheme, including instituting an expanded investigation led by an independent forensic consultancy. This resulted in the termination of relationships with the implicated clients and employees and the opening of criminal cases against them,” Sasfin said.

Sasfin CEO Michael Sassoon told Moneyweb that the Sars claims have no merit.

“It is unjust for banks to be held liable to Sars for taxes that their clients have failed to pay,” he added.

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When news of the summons broke on Tuesday, Sasfin’s share price dropped by around 10%.

On Tuesday, February 26, the share price was trading at around R21,51, but on Wednesday its was trading at around R19.98.

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