CBK issues tough terrorist cash guidelines for banks

Banks will be required to file with the Central Bank of Kenya (CBK) detailed annual reports of risks associated with money laundering and terrorism financing and mitigation measures.

The financial services sector regulator says in an industry guidance note that this is intended to enable banks effectively identify, “assess, monitor, manage and mitigate” the risks associated with the vices.

“On an annual basis, institutions shall provide Central Bank of Kenya (CBK) with a report on the results of its money laundering and terrorism financing risk assessment. The report should be submitted by December 31 of the year,” says CBK.

Banks’ top management and their board will be required to understand the nature of money laundering threats and vulnerabilities an institution faces and ensure that the bank adopts a risk-based approach.

Financial institutions will be required to appoint a money laundering reporting officer. The officer will be the central point of contact with the CBK for anti-money laundering and combating the financing of terrorism.

CBK says banks will be required to identify and assess the money laundering and terrorism risks that may be associated with the institution’s unique combination of customers, products and services, geographic locations, delivery channels and other qualitative factors.

“Attempts to launder money, finance terrorism, or conduct other illegal activities through a bank can emanate from many different sources.

However, certain products, services, customers, entities, and geographic locations may be more vulnerable or have been historically abused by money launderers and criminals,” notes CBK.

CBK in 2016 wrote to lenders instructing them to have customers complete forms explaining the nature of any cash transactions of Sh1 million and above.

In 2015, President Uhuru Kenyatta ordered the CBK and the Financial Reporting Centre to strengthen supervision to curb the laundering of the proceeds of theft and fraud.

A 2013 report by the Global Financial Integrity, a Washington-based non-profit, research and advocacy organisation, tagged Kenya as a high-risk place for money laundering and terrorist finance citing global financial regulators.