EACC seeks access to bank accounts data

Kenya’s top two banks by profitability, KCB and Equity, have recorded a drop in profit for the third quarter between July and September, reflecting shrinking profit margins amid pressure to reduce the cost of loans. Photos/FILE 

By GEOFFREY IRUNGU

In Summary

• The anti-graft watchdog will collaborate with the Kenya Revenue Authority (KRA) to entrench clarity in legislation that would help trace, recover and confiscate assets from tax evasion or unexplained wealth.
• EACC director Mumo Matemu said in an interview that legislation tended to favour banking secrecy and that the legal leeway given his organisation needed to be strengthened to enable the two organisations access information from banking and other institutions.
• EACC and KRA signed a memorandum of understanding last Friday as part of a framework for the partnership.

The Ethics and Anti-Corruption Commission (EACC) is set to push for laws to ease access to bank account information to help audit individuals and entities suspected of tax evasion and economic crimes.

The anti-graft watchdog will collaborate with the Kenya Revenue Authority (KRA) to entrench clarity in legislation that would help trace, recover and confiscate assets from tax evasion or unexplained wealth.

EACC director Mumo Matemu said in an interview that legislation tended to favour banking secrecy and that the legal leeway given his organisation needed to be strengthened to enable the two organisations access information from banking and other institutions.

“Although the law appears to give us some leeway in terms of obtaining information, it is not strong enough and KRA doesn’t have much power to get bank data or information. So that is why we are working so see changes to the law,” said Mr Matemu.

EACC and KRA signed a memorandum of understanding last Friday as part of a framework for the partnership.

KRA has in the past said the next phase of reforms of the tax system is using third-party information, including bank accounts and property registries.

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However, the taxman does not have the statutory powers to acquire the data or information since commercial banks always invoke the principle of customer confidentiality in denying access to such information.

It has to take the intervention of courts for the information to be obtained, and orders take years to obtain. “Banks are not allowed to give information or data unless to authorised credit reference bureaus for investigation of fraud,” said James Kamau, partner at Nairobi-based Iseme, Kamau and Maema Advocates of the current limitation.

Work as a team

Under the new MoU, the two entities will work together to offer support in reviewing and strengthening other legal frameworks for anti-corruption and taxation.

KRA commissioner-general John Njiraini said the taxman and EACC would set up a secretariat and an oversight body to assist the two organisations work as a team.

The oversight committee will be composed of top management from both parties to provide policy and strategic direction in the tasks that are supposed to be carried out together.

Mr Njiraini said vetting of new staff for corrupt activities would become the norm at the authority. Staff facing disciplinary action would also be subjected to an asset and life style audit.

“We will also do vetting by evaluating people’s reaction or behaviour when a potentially corrupt or unethical transaction is presented to them to see whether they take advantage of it,” said Mr Njiraini.