It may look as a mere administrative action by a regulator. But the Central Bank of Kenya’s (CBK) decision to sanction commercial banks that were used as conduits for illicit National Youth Service (NYS) millions is a defining step whose impact will be felt far and wide in the war against corruption and other economic crimes.
This is because throughout the world, governments have two big and effective weapons against illicit finance – the taxman and a clean banking system that make it difficult to move dirty money around.
The CBK’s move is the strongest signal yet that looters of public coffers and dealers in illicit goods will have limited options to ‘clean’ their dirty cash.
Punishing banks that facilitate theft or are used as laundries for dirty cash is the surest and the least costly method to close the taps of corruption, theft and dirty trade.
The CBK’s action is also one that if sustained over time has the potential to preserve the integrity of Kenya’s economy. For too long corrupt officials in both the public and private sectors have used banks to game the system for personal enrichment.
In addition to the regulator’s action to slap hefty fines, the Banking Fraud Investigations Unit of the Directorate of Criminal Investigations (DCI) and the office of Director of Public Prosecution (DPP) must also move in to tighten the noose on banks by holding officials complicit in money laundering enterprise to account.
Banks are legally required to provide the regulator with a report on the latest results of its own money laundering risk assessment by the end of the year. The rules require banks to identify potential risks posed by customers, including use of shell companies, within their operations.
The next frontier in regulating movement of dirty cash should now involve curtailing flow of money between countries as corrupt officials will likely be forced to either stuff notes under their beds or take it to neighbouring jurisdictions with lax rules.
To this end, the CBK will have to collaborate with similar institutions outside the country to establish a wider-reaching supervisory framework.
Such an effort is under way in the European Union where legislators are seeking establishment of a common cross-border agency to check banks in the event central banks are unable to police lenders, a step that could be considered by East African authorities if they are to slay the corruption dragon once and for all.
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.