Banks under probe over link to ‘dirty money’

dubu · 2016-03-29T22:21:13+00:00

IN SUMMARY - The investigation came in the wake of high profile corruption cases which show that senior bank managers could be working in cahoots with corrupt elements to hide looted money. - “Banks do their due diligence in reporting suspicious transactions to the Financial Reporting Centre. Banks have also sanctioned any of their employees found culpable in abetting financial crimes. But still these are isolated cases,” said Mr Olaka. A string of high profile investigations linking several commercial banks to alleged corruption and tax evasion syndicates has put lenders in a tight spot yet again. Several banks are under investigations after a major tax evasion ring was busted at a border entry point. The racket, said to cost the government over Sh120 million in unpaid import duties at Namanga border post, comes barely a month after a similar incident was discovered at the Port of Mombasa. Two Equity Bank staff members and an unnamed number of the Kenya Revenue Authority (KRA) personnel allegedly aided traders at the Namanga border post to import goods without paying duty, depriving the country revenue of more than Sh100 million. Analysts say this is happening despite Kenya having a fairly advanced — by many global standards — anti-money laundering and counter-terrorism financing regulatory and legal regime. On Thursday last week it emerged that other banks are under probe for their role in suspected similar syndicates. The Kenya Revenue Authority said it is widening its investigations to include the National Bank of Kenya, Commercial Bank of Africa and Cooperative Bank of Kenya. Plans are also underway to expand the investigation to cover several other banks, KRA said. The investigation came in the wake of high profile corruption cases which show that senior bank managers could be working in cahoots with corrupt elements to hide looted money. Analysts say while laws and regulations which require banks to conduct checks to detect the proceeds of graft are in place, many lenders are flouting them with no consequences to them. “Many banks will not take rules designed to prevent corruption and other crimes seriously. Corrupt officials will continue to plunder state assets, tax cheats will carry on evading their taxes, and other serious criminals will continue committing their crimes, knowing that they can use banks to get away with it,” says the damning findings of a 2015 global report by campaign group, Global Witness titled Banks and Dirty Money. The report states that banks look the other way, leaving the door wide open for corrupt individuals to launder funds. It adds that since the prospect of rogue bankers going to jail for banking malpractices in Kenya has for a long time remained a mirage, there are adequate incentives for lenders at the institutional level to deal with “dirty corruption money on a large scale”. A 2013 report by the Global Financial Integrity (GFI, a Washington-based non-profit, research and advocacy organisation, captured this dire situation saying global financial regulators tag Kenya as a high-risk place for money laundering and terrorist finance. More recently, a joint report by the African Union (AU) and the United Nations Economic Commission for Africa, (UNECA) unveiled in September this year, showed that the Kenyan economy is haemorrhaging billions of shillings annually in illicit financial outflows, crucial resources which experts say could be used to invest in struggling sectors such as healthcare, education, and infrastructure. The monies, the report observed, are lost through tax evasion by individuals and companies, illegal profit expatriation by multinational firms, organised criminal syndicates and also corruption-related activities in the public sector. The Kenya Bankers Association (KBA) Habil Olaka, however, says banks are not to blame for rampant corruption and other malpractices. “Banks do their due diligence in reporting suspicious transactions to the Financial Reporting Centre. Banks have also sanctioned any of their employees found culpable in abetting financial crimes. But still these are isolated cases,” said Mr Olaka. He said beyond the law, relevant agencies have to collaborate more to address corruption: “We all need to work together to end the menace. This should be a joint approach,” he said. There was a glimmer of hope that rogue financial institutions would be dealt with last November after President Uhuru Kenyatta ordered unprecedented tough new sanctions against individuals and institutions who flout anti-laundering laws. The penalties included loss of licence for banks found culpable. CBK says it is doing its best to curb the mounting cases of tax evasion, corruption and money laundering involving commercial banks. “We are aware of the alleged incidents of fraud in the banking sector. In accordance with our oversight mandate, we have investigated many of these incidents and taken the requisite enforcement action in cases of non-compliance. Furthermore, considerable progress has been made to strengthen our bank surveillance processes and procedures over the years,” said the regulator in an email to Smart Company. SOURCE: Nation

Thread starter dubu
Start date Mar 30, 2016

dubu

JamiiForums uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.

Accept Learn more…

Back

Top Bottom

Forums

New posts

Banks under probe over link to ‘dirty money’

dubu

JF-Expert Member

Our Community

Regional Communities