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German Deutsche Bank closes down NBK accounts over suspected money laundering

By Mwaniki Munuhe | January 29th 2017
National Bank, Harambee Avenue.(Photo: Wilberforce Okwiri/Standard)

German-based lender Deutsche Bank has shut all National Bank of Kenya (NBK) accounts over suspected money laundering activities, Weekend Business has learnt.

Sources within the bank said the closure took effect towards the end of last week. The revelations come even before the dust settles after former chief executive officer Munir Ahmed and five other top managers were edged out over corporate governance issues within the lender.

Deutsche Bank, which is German global banking and financial services company, had in April last year notified NBK of their intention to shut down correspondent banking relationship with the Kenyan based bank.

Contacted, NBK admitted closure of accounts but denied money laundering allegations. “We got a notice from Deutsche bank informing us of its intention to terminate this relationship by April 2016. Deutsche Bank did not indicate the reason for terminating this relationship in the said letter. Through our robust Anti-money laundering (AML) and Know your customer (KYC) processes and systems, we are not in the know of any money laundering attempted or perpetrated through the bank,” NBK told Weekend Business in a statement.

The bank in disputing money laundering allegations, said it has employed strict policies that are adhered to when transacting with customers. “NBK has a correspondent banking relationship with Deutsche Bank and many other banks for purposes of clearing our foreign currency transactions. The correspondent banking relationship is run like any other bank account and either of the parties can terminate this relationship for a myriad reasons by simply giving a notice,” the lender said.

“We we have a full team that does transaction monitoring and all our SWIFT transactions are screened before applied to the accounts hence it is extremely difficult to use the bank for money laundering. No outgoing SWIFT has been rejected by any of our correspondent bank – Deutsche Bank included on suspicion of money laundering. Further, our processes were audited by the Central Bank Kenya (CBK) last year and no issues that relate to money laundering arose.”

In the end, NBK called the decision by Deutsche Bank to terminate all dealings with them “purely a business decision details of which have not been shared with us.”

“We believe that the intention to close the account was purely a business decision details of which have not been shared with us by Deutsche Bank but it is definitely not money laundering. As to whether there were any correspondences with Deutsche bank, these were done on normal business engagements as is always the case between a bank and its customers,” the bank said.

Sank deep into losses

The bank has been struggling to shake off inefficiency and financial misconduct tag that followed the arrest of previous managers over multiple financial misconduct allegations. Last year, Inspector General of Police Joseph Boinnet ordered the arrest of six National Bank of Kenya officials for unethical conduct at the institutions.

NBK officials were the Managing Director Munir Ahmed, Boniface Biko (Executive Director), George Jaba (Chief Credit Controller), Mohammed Abdall ( ICT Director), Wycliff Kavunira (Acting Chief Finance Officer) and Chief Finance Officer Chris Kisire.

The bank’s under performance was exposed when the lender sank deep into losses in the past financial year. The bank made Sh1.2 billion loss, the worst in the last eight years.

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