Why Absa waited 15 months before closing Gupta accounts

Absa had every right to wait 15 months before it closed down the accounts of Gupta-owned companies‚ Reserve Bank Deputy Governor Kuben Naidoo stressed in Parliament on Wednesday.

The law did not allow banks to close accounts simply on the basis of suspicions‚ Naidoo said.

He was replying to a question by Democratic Alliance finance spokesman David Maynier as to why it had taken Absa so long to close the accounts of companies owned by the Gupta family‚ who have come under fire for their close relationship with the president.

Maynier noted that Absa decided to terminate the banker-client relationship with the Gupta-owned Oakbay companies and related parties on November 18 2014‚ but only formally closed the accounts on February 16 2016.

The exchange took place during public hearings held by Parliament’s finance and trade and industry committees on transformation of the financial services sector.

Naidoo said it was correct that banks took a long time to close accounts as this should be a last resort in managing risk.

Bank accounts could not be closed simply on the basis of suspicions – the bar had to be much higher than that‚ Naidoo said.

The closure of bank accounts should not be standard practice‚ he emphasised.

Naidoo said he could not publicly discuss the closure of accounts as this was for the bank and account holder to disclose. Nor could the bank publicly discuss any investigation into any bank accounts.