The Central Bank of Kenya (CBK) has suspended Absa Bank Kenya’s foreign exchange licence for seven days for failing to report specific foreign exchange trades it conducted last month.
CBK took the drastic action after the bank formerly Barclays Bank Kenya failed to provide information about some specific foreign exchange trades that it conducted in March 2020.
“Absa Kenya should cease to transact as an authorised foreign exchange dealer in the Kenyan market from Thursday, April 9, 2020, to Wednesday, April 15, 2020. During this time Absa Kenya cannot transact, inter alia, in the interbank foreign exchange market.,” CBK said in a statement.
The bank is further accused of flouting the anti-money laundering rules during the trade.
“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” reads the statement.
Against this backdrop, Absa Kenya is required to undertake the following:
- By Wednesday, April 15, 2020, put in place a robust framework that ensures all relevant documents for such foreign exchange transactions are available as required and also ensures the AML/CFT and KYC requirements are adhered to.
- Reverse the market positions that were created as a result of the flagged transactions.
- Cease to transact as an authorised foreign exchange dealer in the Kenyan market from Thursday, April 9, 2020, to Wednesday, April 15, 2020. During this time Absa Kenya cannot transact, inter alia, in the interbank foreign exchange market.
CBK says Absa Bank can settle all transactions it did 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.
CBK reiterates its objective of building sound, fair and transparent financial markets, anchored in the law and according to global best practices.