The Absa bank headquarters in Westlands, Nairobi. Picture: REUTERS/NJERI MWANGI
The Absa bank headquarters in Westlands, Nairobi. Picture: REUTERS/NJERI MWANGI

On Thursday, the Central Bank of Kenya suspended Absa’s foreign exchange licence, citing lax anti-money laundering controls.

Absa Bank Kenya will pause trading as an authorised forex dealer from April 9 to 15, the central bank said in a statement. 

“In investigating these and other, earlier transactions, it is evident that Absa Bank Kenya did not have satisfactory assurance of the underlying commercial transactions supporting these trades, as is required; nor did the bank ensure the standard checks on anti-money laundering and combating the financing of terrorism, and know-your-customer requirements, were applied,” the central bank said.

Absa Group, which has a presence in 12 African countries, said it will be required to put in place a robust framework that will ensure all relevant documents for forex transactions are available by Wednesday, April 15, the central bank said. It will have to reverse the market positions created as a result of the flagged transactions. 

Absa said it has decided to cancel two forex transactions flagged by Kenya’s central bank, pending a resolution.

“These were being executed on behalf of highly reputable, global financial institutions, which are regulated in line with best international practice. The transactions were executed at prevailing market rates. This was done to demonstrate our willingness to address fully the concerns of the regulator,” Absa said.

It added that it is engaged in ongoing consultations with the Central Bank of Kenya to try to resolve the matter in the shortest time possible.

Said Absa,“We remain committed to being a constructive participant in Kenya’s financial markets and to contributing to its further developments in the interest of all customers and stakeholders.” 

Correction: April 12 2020

A previous version of this article incorrectly stated that Absa had said it needed to ensure documents for forex transactions were available by Wednesday. The statement was made by the Central Bank of Kenya. Also, the central bank suspended Absa’s foreign exchange licence over lax anti-money laundering controls and not a failure to disclose trades it conducted in March as initially reported.

thukwanan@businesslive.co.za