CBK sanctions Absa over lax forex checks

The Central Bank of Kenya (CBK) has slapped the newly rebranded Absa Bank Kenya, formerly Barclays Kenya, with sanctions among them a one-week suspension as an authorised foreign exchange dealer for failing to ensure standard checks on some trades in March.

The CBK says the lender failed to ensure standard checks on anti-money laundering and combating the financing of terrorism (AML/CFT) and know-your-customer (KYC) requirements on the unspecified transactions.

In as statement issued today, the banking sector regulator said it had taken regulatory action against Absa Kenya, following the bank’s failure to provide information about some forex trades that it 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,” CBK said on Thursday.

It said Absa Kenya is now required to undertake several corrective measures among them to put in place a robust framework that ensures all relevant documents for such forex transactions are available as required, and also ensures the AML/CFT and KYC requirements are adhered to by April 15, 2020.

It also ordered the bank to reverse the market positions that were created as a result of the flagged transactions.

But the most painful sanction was asking the bank to cease to transact as an authorised forex dealer in the Kenyan market from today (April 9) till Wednesday next week.

“During this time Absa Kenya cannot transact, inter alia, in the interbank foreign exchange market. However, all committed transactions as at April 8, 2020, can be settled,” CBK said.

It added that Absa Kenya’s acknowledgement of its obligations as an authorised foreign exchange dealer and its commitment to address the underlying issues was noted.

“CBK reiterates the objective of building sound, fair and transparent financial markets, anchored in the law and according to global best practices,” the statement added.

It however did not reveal if any financial penalties were slapped on the bank or the amounts involved in the flagged foreign exchange transactions.

Since Kenya confirmed its first case of Covid-19, the shilling has been losing ground against the US dollar, moving from an average of Sh102 to a low of Sh106 this week.

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