Regulator penalises Absa Bank Kenya over anti money-laundering lapses

Kenya’s central bank has ordered Absa Bank Kenya to stop foreign exchange dealing between April 9 and April 15 for failing to observe anti money-laundering rules on some trades.

The central bank said it took action over foreign exchange trades Absa Bank carried out in March and said Absa had also failed to satisfactorily make “know your customer” checks.

“Absa Kenya is required to ... reverse the market positions that were created as a result of the flagged transactions,” the central bank said in a statement on Thursday. It did not give any details of the trades involved.

In response Absa Kenya said its parent Absa Group and all its subsidiaries had strict anti money-laundering policies and on combating the financing of terrorism. It also said know-your-customer policies were applied in all their businesses.

The central bank said Absa would also be required by April 15 to have put in place stronger measures to make sure all documentation needed for foreign exchange transactions was available and followed the regulations.

It said Absa Bank could settle all its transactions as of April 8. “Absa Kenya’s acknowledgement of its obligations as an authorised foreign exchange dealer and its commitment to address the underlying issues is noted,” the central bank said.

Absa Kenya said that when the central bank raised its concerns it had stopped two foreign exchange forward transactions it was carrying out for two unnamed reputable global financial institutions while it addressed the regulator’s concerns.

“The transactions were executed at prevailing market rates. The decision to cancel the transactions was taken to demonstrate our willingness to address fully the concerns of the regulator,” Absa Kenya said.

“We are in ongoing consultations and discussions with the Central Bank of Kenya to fully resolve all matters raised in the shortest possible time.”

Photo Credit: REUTERS/Njeri Mwangi