Absa Bank Kenya barred from forex trade until Wednesday 15 2020
The Central Bank of Kenya has been forced to take regulatory action against Absa Bank Kenya for what it terms “failure to provide information about some specific foreign exchange trades”. The alleged foreign exchange trade was conducted in March 2020. “In investigating these and other earlier transactions it is evident that Absa Kenya did not have satisfactory assurance of the underlying commercial transactions supporting these trades, as is required, nor did the bank ensure the standard checks on anti-money laundering and combating the financing of terrorism (AML/CFT) and know-your-customer (KYC) requirements were applied”, said CBK in a statement to the press.
Going by the CBK Statement, it seems Absa Bank Kenya seems to have allowed suspicious transactions to have taken place through its Forex trade, transactions that could allow for people to launder money, aid terrorism or just turn a blind eye to any other criminal activities.
The regulatory action the Central Bank of Kenya has taken against Absa Bank demands for Absa Bank to:
- Put in place a robust framework that ensure all relevant documents for such foreign exchange transactions are available as required, and also ensure that AML/CFT and KYC requirements are adhered to by Wednesday, April 15, 2020.
- Reverse the market positions that were created as a result of the flagged transactions.
- Cease to transact as an authorised foreign exchange dealer in the Kenyan market from Thursday April 9, 2020, to Wednesday 15, 2020. During this time Absa Kenya cannot transact, inter alia, in the interbank foreign ehange market. However all committed transactions as at April 8, 2020 can be settled.
The Statement by CBK indicates that Absa Kenya has committed itself to abide by the regulatory action, where therefore the bank will not be engaged in forex trade between today and Wednesday next week. “Absa Kenya’s acknowledgement of its obligation as an authorised foreign exchange dealer and its commitment to address the underlying issues is noted”.
Given that the failure by Absa Bank Kenya to provide information about some specific forex trade only happened in the month of March 2020, it can be argued that the bank has the systems CBK intends it to implement between now and Wednesday next week, only that Absa did not use that system in the month of March. The question someone may ask is why?
In the month of March we have had economic slowdown occasioned by work from home, curfew and social distancing thanks to coronavirus. It is possible that some of the Absa staff involved in capturing information on forex trade at Absa Bank Kenya have been asked to lay low during this pandemic hence the luxity in providing CBK with requisite information.
It is also possible that Absa Bank Kenya was onto something malicious that CBK ought to investigate instead of just saying, “hey Absa, you guys didn’t follow the law in March, can you ensure you follow it in one week?”
See also: WHY CBK IS SHOPPING 400 MILLION DOLLARS FROM THE LOCAL BANKS
