Commercial banks have backed the Central Bank of Kenya (CBK) stringent anti-money laundering laws, despite plans by legislators to relax them.
Sector lobby Kenya Bankers Association (KBA) chairman Joshua Oigara said the laws were necessary to protect the integrity of the banking system.
“We are behind these rules. We have to protect our financial sector,” said Mr Oigara, who is also the KCB Group managing director Wednesday.
The lender was among five banks including Standard Chartered Kenya, Equity Bank, Diamond Trust Bank and Co-operative Bank, which the CBK fined for not following proper procedures when they helped to move Sh8 billion funds stolen from the National Youth Service.
Mr Oigara said KCB had paid the fine, adding that the lender has since tightened its internal systems and stepped up monitoring of transactions.
Last month, Central Bank Governor Patrick Njoroge pushed back against a bid by MPs seeking to soften the anti-money laundering laws, warning that the proposed amendments would frustrate the war on corruption and cut off Kenya’s banking sector from the global financial system.
The CBK boss told MPs that Kenya risked being seen as tolerant to money laundering and financing of terrorism if it implemented changes the legislators proposed six months ago.
“The adverse effect of the amendment on the banking sector would be immediate termination of relationships by foreign correspondent banks and closure of accounts of Kenyan banks (de-risking),” he told the National Assembly’s Finance Committee.
The law requires all financial institutions including banks, insurance companies and saccos to file with the Financial Reporting Centre daily reports on transactions above Sh1 million and those deemed suspect.
Bank executives and persons who are convicted for handling illicit cash face a Sh1 million fine and a three-year jail term, while institutions including banks, credit unions facilitating such deals could be fined up to Sh20 million upon conviction. Banks could also lose their licences.
President Uhuru Kenyatta had earlier ordered unprecedented tough new sanctions against individuals and institutions who flout anti-money laundering laws.
The penalties included loss of licence for banks found culpable.