Newly rebranded Absa bank Kenya - formerly Barclays- has been suspended as a foreign exchange dealer for one week for overlooking standard checks on some trades made in March.
The suspension runs from April 9 to April 15.
The Central Bank of Kenya (CBK) accused the lender of failing to ensure standard checks on anti-money laundering and combating the financing of terrorism (AML/CFT) and know-your-customer (KYC) requirements on the unspecified transactions.
"During this period, Absa cannot transact in the inter-bank foreign exchange market. However, all committed transactions as of April 8 can be settled," Governor Patrick Njoroge said.
In investigating those and other earlier transactions, CBK said it is evident that Absa Kenya did not have the satisfactory assurance of the underlying commercial transactions supporting those trades, as is required.
The regulator said, Absa must undertake several corrective measures among them putting in place a robust framework to ensure all relevant documents for such forex transactions are available as required and further ensure the AML/CFT and KYC requirements are adhered to by April 15, 2020.
It also ordered the bank to reverse the market positions that were created as a result of the flagged transactions.
“CBK reiterates the objective of building sound, fair and transparent financial markets, anchored in the law and according to global best practices,” the statement added.
It, however, did not reveal the amount involved in the illicit currency exchange nor did it reveal whether it would consider financial penalties on the lender.
CBK’s action against Absa Bank Kenya is coming after CBK governor Patrick Njoroge accused some currency dealers of unethical practices after the regulator announced plans to buy $1 million (Sh100 million) every month till June to boost forex reserve in the wake of COVID-19.
Speaking at a post-Monetary Policy Committee video conference Njoroge said the regulator is closing in on some of the dealers.
The shilling has been depreciating against the greenback since March when the announcement was made, with the drop accelerated by the effects of COVID-19.
The shilling is currently trading 106.40-50 against the dollar, from an average of 102 in February.
