Banks in Kenya rush to counter money laundering cases


Commercial banks in Kenya have been on the limelight with accusations of abetting money laundering and being involved in national corruption scandals. Such was the case several banks which in 2018, CBK accused them of participating in payments for the National Youth Services (NYS) scandal.,

In this case, the director of public prosecution announced that he was considering prosecuting 20 senior officials in five banks, which they believe aided the laundering of at least Ksh1 billion ($10 million) looted from the National Youth Service (NYS) between January 2016 and April 2018.

These commercial banks have however developed mechanisms to conform to anti-money laundering laws developed in Kenya.

The law requires all financial institutions including banks, insurance companies, and SACCOs to file with the Financial Reporting Centre daily reports on transactions above Sh1 million and those deemed suspect. This is under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA).

Bank executives and persons who are convicted for handling illicit cash face an Sh1 million fine and a three-year jail term, while institutions including banks, credit unions facilitating such deals could be fined up to Sh20 million upon conviction. Banks could also lose their licenses.

Sector lobby Kenya Bankers Association (KBA) says the laws were necessary to protect the integrity of the banking system.

A report published by the United States Department of State Bureau for International Narcotics and Law Enforcement Affairs last year said money laundering in Kenya occurs in the formal setups like banks as well as in informal sectors, fuelled by domestic and foreign criminal operations.

DTB bank last week announced that it has hired a top anti money laundering expert to take the bank through major steps of containing this vice.

As part of ongoing efforts to enhance the Bank’s corporate governance structure and capacity, the DTB Kenya Board has tapped the services of Sagheer Mufti a former Citi Bank Global Head of Anti Money Laundering Operations. Mufti is Currently serving as the Chief Operating Officer for HBL (formerly Habib) in Pakistan.

Speaking when he confirmed the appointment, DTB’s Chairman Linus Gitahi said the entry of Mufti in the DTB Board would significantly expand the board’s capacity to provide dynamic leadership and oversight.

“The board is pleased to welcome Mufti who has a set of rare skills and will undoubtedly contribute to the Board’s diversity,” Gitahi said.

A professional Banker with close to four decades’ experience, Mufti holds a Masters in Business Administration from the George Washington University. He is responsible for building a corporate culture based on operational excellence and technology capabilities for over 14 million clients served by the Bank in over 20 countries.

Before joining HBL, Mufti served as the COO for Abu Dhabi Islamic Bank (ADIB) based in Abu Dhabi. He had previously served Citi for more than 34 years in different management and leadership roles. While at Citi, Mufti, led various enterprise transformation programs and business redesign responsibilities at a global level rising to serve as the Global Head of Anti Money Laundering operations.

The move by DTB Bank follows an advisory given by the Central Bank of Kenya last year in which it called for all commercial banks, microfinance institutions, and mortgage finance companies to nominate “an independent and competent external third party” to evaluate the institution’s compliance to anti-money laundering and combating the financing of terrorism programs.

The illegal transfer of dirty money has not only affected Kenyan banks in Kenya but has also touched on those with operations in the region. Last year, Equity Bank Tanzania, a subsidiary of Kenyan based Equity Group was among five banks fined a total of Sh83 million by Tanzania for flouting anti-money laundering regulations.

Bank of Tanzania (BoT) said the five failed to conduct proper customer due diligence and file suspicious transaction reports to the Financial Intelligence Unit (FIU). Equity Bank was fined Tsh580 million (Sh26.2 million) while another Kenyan listed lender I&M Bank was fined highest at Tsh655 million (Sh29.6 million).

Other are UBL Bank, Habib African and ABC Bank which were charged an equivalent of Sh10.6 million, Sh7.9 million and Sh6.5 million.

Read also: Africa renews fight on tax and financial crimes(Opens in a new browser tab)


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