Kenyans were shocked on Tuesday with news that Flying Squad detectives found Sh2 billion fake money at Barclays Bank's Queensway branch.
The fake notes in 100-US-dollar denominations were found hidden in one of the bank’s safe boxes.
Reports indicated that five people were arrested — three men and two women — in connection with the stash and that the safe box had been in operation since 2017.
As detectives worked to unravel the case, questions were asked, including how the bank did not notice the existence of the fake money.
So what does it take to obtain a safety deposit box at a bank and how is one operated?
Here is an overview:
What is a safe box?
A safe deposit box is a strong storage container maintained in the vault area of a bank and rented to bank clients for safekeeping of their valuables. These boxes are said to be resistant to fire, floods and theft, and their contents are covered by the bank's insurer.
What are safe boxes in banks used for / What can be kept in them?
The safe boxes are rented by clients wishing to store vital documents such as logbooks, title deeds, marriage certificates, insurance policies, jewellery, foreign currency, educational certificates among others.
However, clients are discouraged from storing essential documents such as Wills and passports. It’s advisable to keep a Will with a lawyer for easy access by family members upon one’s death. What can be kept in the vault is a copy of the same.
Do banks allow cash to be kept in safe boxes?
Cash can be kept in the boxes but it does not earn interest.
How are they operated and who has access?
One key is issued to the client for access while the bank retains a copy. The two keys are needed to access the contents of the box so both the customer and a bank staff have to be present to open the safe.
Each bank has its own guidelines on who can access the safe box. At the Commercial Bank of Africa (CBA), for example, safe deposit lockers can be operated by up to two people including an authorised agent.
Do banks verify the contents of safe boxes?
Banks do not check the contents of safety deposit boxes. This is because since the contents are private and confidential, a client signs an indemnity document that states that should authorities find anything illicit, the person to be prosecute or held fully liable is the client and not the bank.
This is why a safety deposit is usually covered by a cash margin or deposit in case of any eventualities or penalties.
In a statement on Tuesday, Barclays Bank noted that it was against banking regulations for the client to keep counterfeit banknotes in his personal safe deposit box
"The contents of personal safe deposit boxes are not part of the bank’s deposits and are only known to the client. However, these may not include items prohibited in terms of the law," it said.
It added, "Barclays has already notified its primary regulator, the Central Bank of Kenya, and assured it that it will continue to provide active assistance to the police until the investigation is completed. Barclays takes a zero tolerance approach to all forms of criminal activity and will always assist the police and regulators in their investigations."
What is the procedure for getting a safe box at a bank?
The client expresses interest in renting the box and then pays for the service after fulfilling all the legal requirements and following laid down procedures for the same.
The requirements vary depending on whether the safe box is intended for an individual, a company, a partnership, a club or an association.
For the CBA, an individual is required to submit a duly completed and signed application form, original Kenyan national identity card or valid passport and the photocopies for each signatory.
A limited company is required to submit a board resolution, signed by at least two directors, stating the intention to lease a locker, the required size and the signing/operating mandate.
How much does this service cost?
The Co-operative Bank of Kenya offers a standard annual fee of Sh3,000 while Stanbic, CBA and I&M rates are dependent on the size of the box, which is determined by the bulk of the contents.
Stanbic charges its clients between Sh2,400 and Sh6,000, exclusive of a 16 per cent value added tax. Standard Chartered Bank halted the service in 2010.
I&M safe deposit clients are not subjected to any charges. Rather, they are required to place an interest-free security with the bank. The amount differs depending on the size of the box.
Clients are also required to hold personal accounts with the bank. The deposit ranges from Sh80,000 to Sh300,000 and the money is refundable.
For CBA, the annual cost ranges from Sh2,000 to Sh5,800 depending on the size of the box. The client pays Sh200 per visit and is required to deposit a fee of Sh10,000 which is non-interest bearing and refundable.
After how long are safe boxes considered abandoned?
According to the Unclaimed Financial Assets Act, of 2011, uncashed bankers cheques and contents in safe deposit boxes that are unclaimed for more than two years are classified as unclaimed assets.
The assets are surrendered to the Unclaimed Financial Assets Authority (UFAA), which keeps the cash in the Central Bank of Kenya’s trust account.
Assets covered by the Act also include bank cash balances, insurance policies, utility deposits and court awards abandoned for between two and five years.
What are the advantages of safe boxes?
Unlike home safes, a safe deposit box is secure as it has a smoke detectors and surveillance cameras and is made of fire resistant materials.
Kenyans living abroad are some of those opting for safe deposit boxes as there is the assurance that their important documents will not fall into the wrong hands.
Are there concerns about safe boxes?
In 2018, John Mututho, a politician and former chairman of the National Authority for the Campaign Against Alcohol and Drug Abuse (Nacada) boss, asked the CBK to conduct an audit of bank safes, saying they could be holding fraudulently acquired wealth.
Mr Mututho expressed fear that some banks might be holding on to corruptly acquired cash.
“While we should be worrying about loot stashed in foreign accounts, we should not forget to probe local avenues that can be used to hide the cash,” he said.