Banks put on high alert over money laundering

CBK Governor Patrick Njoroge.

Central Bank of Kenya (CBK) has asked banks to intensify their surveillance against money laundering activities by their clients. 

In a circular sent to lenders this month, the regulator said they should particularly watch out for suspicious activities on accounts of politicians and senior government officials, Non-Governmental Organisations and cash-intensive businesses such as supermarkets, liquor stores and car dealership.

Others are those operated by professional service providers, foreigners, casinos, real estate dealers and dealers in precious metals.

The Central Bank ordered the lenders to draw up a profile of account holders and map the risk they pose as channels of money laundering and terrorism financing.

CBK said the new prudential guidelines on anti-money laundering would inform resource allocation for various risk areas and policies to be put in place.

"Certain customers and entities may pose risk depending on the nature of their business, the occupation of the customer, the nature of the anticipated transaction activity and as prescribed under FATF (Financial Action Task Force’s) standards," said CBK in the circular.

Detailed analysis

Suspicious transactions such as those taking place significantly far from the location of the institution, movement of accounts to different institutions as well as the unexplained movement of money between institutions in various geographical locations, CBK said, would have to be tracked and reported.

Apart from lenders, forex bureaus and money transmitters will also be placed under the microscope.

Banks will now be required to appoint a money laundering reporting officer who will prepare a worksheet on customers noting down the customer type, risk rating, rationale, mitigation/ controls, scores, weights used and the residual risk.

They will then draw up a detailed analysis of the number of domestic and international funds transfers, types of customers, geographic locations of the bank’s business area and customer transactions. This will be reported to the CBK on a yearly basis at December 31.