New rules place banks’ fiduciary duty in dilemma

I once stumbled upon an old case against a famous bank in Kenya, filed in the late 80’s, with the subsequent judgment entered against the bank. Although the bank appealed to the Court of Appeal and a judgment entered in its favour, by overturning the decision of the High Court (narrowly I would say), the High court raised salient issues that presently manifest in the recent decision by the Central Bank of Kenya to fine five banks, namely, KCB Group, Equity Bank, Standard Charted Bank- Kenya, Diamond Trust Bank and Co-operative Bank having been found to have breached the CBK’s guidelines.

The question that was uppermost in the mind of the superior court was “Would a bank in the face of what everyone agrees is an unusual and suspicious transaction, be entitled to make inquiries about that transaction?” From this question, a series of other questions are formulated, such as, “What is the extent to which such inquiries can and should be made?’’ and “How far can a bank go in pursuit of finding the ‘truth’?’’ Just where do you draw the line?