14 April 2014

Kenya: Banks Boost Money Laundering Scrutiny

Photo: Siegfried Modola/IRIN
Nairobi: Kenya cleared in anti-money laundering review.

We are watching: Banks are increasing checks against fraud and money laundering by account holders and those transacting with them.

Banks are introducing more checks to scrutinise customers against money laundering and fraud, with some shining spotlight on depositors and others set introduce biometric measures.

Barclays Bank Kenya, for instance, has revised its deposit slip to ask for much more information than it previously did, while Family Bank is to roll out a biometric system in bid to curb fraud.

At Barclays, a depositor now has to write their full name, purpose of deposit, email address, ID or Passport number, mobile phone number and nationality. They must also provide a "narrative" in form of ATM card number, reference number, bill number, student number, or other distinct information.

Officials handling a transaction must now write their name, give the transaction a ticket number, state who provided the number, and indicate the date and time.

Barclays CEO Jeremy Awori did not respond when reached for comment on the new-look deposit slip, and whether the bank has tapped other measures Banks increase checks on money laundering, fraudto monitor transactions.

Family Bank's chief executive Peter Munyiri said the mid-tier lender has set side Sh60-70 million for the biometric system this financial year. He said the bank employs other measures under know-your-customer to curb fraud and money laundering.

"We have always emphasised on the KYC. At the point of opening an account we make sure we obtain as much information as we need to. Secondly, our back-end systems can sieve 'suspicious transactions' through exceptional reporting," Munyiri told the Star.

"We've got a team that every hour or two monitors activities happening inside the bank - whether depositing over the counter or funds transfer through real time gross settlement which is end-to-end without human intervention. We ensure that our bank does not become part of the circle of money laundering," he said.

Munyiri said the biometric system will enhance customer identification features, something he says is a first in the market. The bank has 73 branches, and will add another 12 this year.

"One of the things that is unique with any individual are the fingerprints. We're going that route to just make sure that we tighten controls on transactions."

Customers will still need the card, only that authentication will be much easier. Individual's biometric data will be as is contained in government registries, he said.

"Effectively, when that information does not tally then there would be a problem."

Kenya Bankers Association's chief executive Habil Olaka said biometric identity capture is useful for cases where matching the identity of the person transacting with the record held by the institution is required before transacting.

"It has therefore picked up in insurance (e.g. medical at the point of service provision) and lenders especially in the MSME ranks, and in large institutions to identify ghost workers who enjoy services they are not entitled to.

"As with new technology, there could be procedures in the banking system that could be more efficient if the biometric alternatives were considered. The innovators however need to more aggressively bring a value proposition on the table," Olaka said.

The anti-money laundering measures mean banks are incurring additional costs to effect the checks, but KBA said it is not possible to estimate the costs because of "the incremental nature" of the measures.

Olaka said: "Even the FATF (Financial Action Task Force on money laundering) requirements have recently been revised and this may entail additional incremental requirements on the customer due diligence processes in banks, and the additional cost, if any, may not be directly apportionable to the AML measures."

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