Thursday morning, the financial industry regulator, Central Bank of Kenya (CBK) banned Absa Bank of Kenya (formerly Barclays Bank) from conducting the trade in foreign exchange for a period of 7 days, effective today (9th April 2020).
“CBK has taken regulatory action against Absa Bank Kenya PLC (Absa Kenya), following Absa Kenya’s failure to provide information about some specific foreign exchange trades that it conducted in March 2020…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”, the statement stated in part.
The statement was met with confusion; cheers and anger going by the messages shared by Kenyans on social media.
For
The #AbsaBankScam happened in March, as banks got massive regulatory reprieves due to coronavirus. Not fair.
— DD (@Disembe) April 9, 2020
Against
“it is evident that ABSA Kenya did not have satisfactory assurance of the underlying commercial transactions supporting these trades, as is required”
Required by what law? This is not an AML violation, it is exchange control through the back door. Shame on you @CBKKenya https://t.co/pF42L7jBiz— David Ndii (@DavidNdii) April 9, 2020
Deputy President William Ruto link
Now, sources speaking to KenyanBulletin.com have said the fall of shilling to Sh106.47 to the US Dollar is linked to this illegal trade in foreign exchange (FX).
“I think they found a way around the law but were found out. Let me ask someone. They sold massive dollars to a client without enough underlying support/ reason source of funds as required by regulator. Because of that trade, the shilling fell to 106.47 to the US$ yesterday’, stated the source.
KenyanBulletin: Who is the client?
Source: The client is DP.
Taming the narrative through coronavirus talk
As soon as the scandal broke and the statement by the CBK shared and retweeted massively. A breaking news alert that the DP would address Kenyans on the coronavirus pandemic broke out.
The DP in his speech appeared lacklustre with repetitions that bore Kenyans to death.
Sources say, he had to do this so as to change the narrative that has been planned for him today.
Foreign Exchange Scandal
CBK had issued the below statement in full:
REGULATORY ACTION AGAINST ABSA BANK KENYA PLC
The Central Bank of Kenya (CBK) has taken regulatory action against Absa Bank Kenya PLC (Absa Kenya), following Absa Kenya’s failure to provide information about some specific foreign exchange trades that it conducted in March 2020.
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.
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. However, all committed transactions as at April 8, 2020, can be settled.
Absa Kenya’s acknowledgement of its obligations as an authorised foreign exchange dealer and its commitment to address the underlying issues is noted. CBK reiterates the objective of building sound, fair and transparent financial markets, anchored in the law and according to global best practices.
Signed
CENTRAL BANK OF KENYA
More to follow
