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‘Fake Sh2bn’ seized in Barclays client’s safe

fake dollars
Detectives from the Directorate of Criminal Investigations escort suspects (with heads covered) from the Barclays Bank of Kenya Queensway Branch after they were arrested March 19, 2019 for keeping fake currency in a safe deposit box. PHOTO | JEFF ANGOTE | NMG  

Detectives Tuesday impounded $20 million (Sh2 billion) in what they said was fake currency at the Barclays Kenya Queensway Branch in Nairobi.

The seizure exposed the weak underbelly of customer surveillance systems in the banking sector a day after CBK gave a tough directive to banks on handling of illicit cash.

Barclays #ticker:BBK said that one of its customers at the branch had kept the fake currency in a safe deposit box.

The customer, whose name the bank declined to disclose, was arrested by police during the raid.

Staff members

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Police sources also indicated that two staff members at the branch and three other suspects had been taken in for questioning.

“The customer had concealed fake currency in his personal safe deposit box against the bank rules and regulations which include restrictions of items which can be held in the box…the contents of personal safe deposit boxes are not part of the bank’s deposits and are only known to the client,” said Barclays Kenya in a statement.

“We continue to fully co-operate and assist the authorities with this investigation.”

The loophole in the bank’s surveillance system, which allowed a customer to move into its premises $20 million in fake bills, underlines the calls by Central Bank of Kenya (CBK) for banks to audit the measures they have put in place to keep out illicit funds.

CBK’s directive dated Monday, March 18, also come in the wake of serious allegations against bank officials over their handling of proceeds of corruption in the country, notably in the National Youth Service (NYS) scandal that has already seen a number of commercial banks fined by CBK for handling stolen cash.

KCB, #ticker:KCB Standard Chartered Kenya, Equity Bank, Diamond Trust Bank and Co-operative Bank were last September fined a total of Sh392.5 million for not following proper procedures when they helped to move Sh8 billion funds stolen from the NYS.

The regulator has now ordered all commercial banks to nominate an independent auditor to review their money laundering and financing of terrorism preventative measures as required by the Proceeds of Crime and Anti-Money laundering Act (POCAMLA) and the Prevention of Terrorism Act.

Terrorism oversight

The government is also tightening oversight on terrorism financing after it emerged that the perpetrators of the 14 Riverside terrorist attack in January had moved millions of shillings through banks and mobile money without being reported to authorities.

“To facilitate the implementation of these requirements, CBK hereby issues a directive to all commercial banks, microfinance banks and mortgage finance companies to nominate an independent and competent external third party to undertake a review of the institution’s AML/CFT compliance programme,” said CBK in the circular to commercial banks. The lenders have a deadline of March 31 to nominate the auditor and submit their name to CBK for approval.

The independent auditors will among other things review the customer due diligence measures (know-your-customer) deployed by financial institutions, and evaluate the suitability of a lender’s money laundering and terrorism financing risk assessment. They are also to review the adequacy of internal policies, systems and procedures used by banks to monitor transactions and keep records.

“The independent and competent third party appointed by the institution will be required to test the institution’s reporting process for suspicious transactions and large cash transactions with the Financial Reporting Centre (FRC),” said CBK.

Additional reporting: Bonface Otieno

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