Kenya’s Central Bank has revealed plans to shield local lenders from money laundering activities.
To strengthen its risk-based approach in managing money laundering and terrorism financing (ML/TF) risks in the banking sector, the Central Bank of Kenya (CBK) has drafted a Guidance Note on Conducting Money Laundering/Terrorism Financing Risk Assessment.
The Guidance Note, which is a policy document for Kenya’s banking industry, is intended to supplement the CBK’s Prudential Guideline on Combating the Financing of Terrorism, which requires institutions to carry out ML/TF risk assessment to facilitate the identification, assessment, management and mitigation of associated risks.
The recently announced proposal comes at a time when the Kenya Revenue Authority, the country’s taxman, is working to crack down on tax evasion. The Authority is looking to ramp up its revenues, which have fallen millions of shillings short of government targets over the past few years.
The purpose of the Guidance Note is to ensure an institution’s ML/TF risk assessment. The CBK has affirmed that it is compliant with the Central Bank of Kenya Prudential Guidelines on Anti-Money Laundering and Combating the Financing of Terrorism and Regulation.
According to Kenya’s Central Bank, the Guidance Note also meets international standards and is robust enough to support a risk-based approach to managing money laundering/ terrorism finance risks.
Under the Guidance Note’s proposed amendments, a financial institution is required to appoint a Money Laundering Reporting Officer. The officer will be the central point of contact with the CBK for anti-money laundering/combating the financing of terrorism purposes.
“Attempts to launder money, finance terrorism, or conduct other illegal activities through a bank can emanate from many different sources,” the regulator said in a statement.
“However, certain products, services, customers, entities, and geographic locations may be more vulnerable or have been historically abused by money launderers and criminals,” the CBK added.