Banking in Kenya and Financial institutions have practised Anti-money laundering in Kenya as part of the rules in their operations. It was only after the increased terrorist activities and organised crime that the world became most alert. The world realised that terrorists and organised crime groups were using financial institutions to clean their dirty money and make it look legitimate.
What is the meaning of Anti-money laundering in Kenya?
Money laundering can be said to be the deposits of stolen or dirty money in the banking system with a view to make it clean. When money is gain in an unlawful way, the money will be introduced into the financial systems by purchasing goods or banking the same into a bank. The banks would rather that they are not used to clean this money and hence the anti-money laundering policies. The banks or financial institutions ask that all monies banked have a legal source.
The central bank of Kenya has published the legal obligations to be followed by the Kenyan banks for anti-money laundering. According to the CBK-prudential Guidelines 08/2006 “an Institution shall establish appropriate policies and procedures and train staff to ensure adequate identification of customers, their sources of funds and the use of the said funds. Such policies should ensure the effective prevention, detection and control of possible money laundering activities and terrorist financing.”
Core obligations of Banks for anti-money laundering in Kenya
- Know your customer (KYC), the financial institution must ensure to identify and verify the potential customer or business. Due diligence must be done.
- Record keeping. All the records of transactions between the bank and client must be kept for at least seven years of termination of the relationship or the last transactions is concluded. All KYC documents must be kept safely as evidence of due diligence carried out for KYC purposes.
- Reporting duties: The financial institutions must ensure that they report to the necessary authorities any suspicious or unusual transactions. The suspicions may be due to the huge amounts being deposited and withdrawn.
- Training and awareness creation: Employees must be trained on Anti-money laundering aspects. The clients must also be made aware of this policy. This may be through websites belonging to the financial institutions or newsletters and terms and conditions the clients sign.
- Internal operational rules and policies: policies and procedures on Anti-money laundering must be implemented in the operation of the financial institution.
Financial institutions and Banks may get involved in money laundering if they are negligent towards this policy or do not train their staff on the same. The banks must ensure that they are on the front line in fighting money launderers. Ill gotten gains should not be allowed to circulate in the financial systems. Anti-money laundering in Kenya must enforced by all financial institutions.