CBK orders financial institutions to freeze Bangui assets

Politics and policy

The CBK said that the implementation of the UN resolutions is on a progressive basis. Photo/FILE 

By GEOFFREY IRUNGU

In Summary

• Central Bank issued the circular to comply with United Nations Security Council Resolution No. 2134, following the deterioration of the situation in the Central African Republic (CAR).
• Fighting erupted in March 2013 after rebels led by Michel Djotodia forced President Francois Bozize out of the capital Bangui and into exile.
• The CBK said financial institutions should get ready as a list of the targeted individuals and other entities would be released by the United Nations Security Council Committee.

Kenyan financial institutions have been ordered to freeze assets belonging to individuals and firms behind the Central African Republic (CAR) violence, where thousands have been massacred or displaced since last year.

Central Bank of Kenya (CBK) assistant director in the Bank Supervision Department Matu Mugo issued the circular to comply with United Nations Security Council Resolution No. 2134, following the deterioration of the situation in the country.

Fighting erupted in March 2013 after rebels led by Michel Djotodia forced President Francois Bozize out of the capital Bangui and into exile.

The CBK said banks, mortgage finance companies and microfinance banks should get ready as a list of the targeted individuals and other entities would be released by the United Nations Security Council Committee.

“Commercial banks, mortgage companies and microfinance banks are directly affected by Paragraph 32 of Resolution 2134 of 2014. …The Committee will issue a list of designated individuals and entities to enable member states to implement Paragraph 32,” said Mr Mugo in the circular.

Paragraph 32 of the resolution said that the Security Council had instructed all member states to “freeze without delay all funds, other financial assets and economic resources which are on their territories, which are owned or controlled…by the individuals or entities designated by the Committee.”

The CBK drew attention of the banks to “a total breakdown in law and order, the absence of the rule of law and religiously-motivated targeted killings and arson.”

It was not immediately clear whether there were particular assets targeted in Kenya, but a CBK supervision official said the directive issued regulators could as well be meant to stop any money filtering into the system after the circular was issued.

CAR is a Francophone country that is linked to global networks of animal trophy and arms trafficking. Nairobi has become a hub for political and business elites in the region, as it has the most developed financial market in sub-Saharan African outside Nigeria and South Africa.

“You know it is not necessarily that there are such assets here but at times this is to address any money that tries to enter the system after the circular is issued,” a bank supervision officer who is not authorised to speak to the media said.

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Analysts, however, said the depth of the problem in CAR was not amenable to “token solutions” like freezing of assets since the protagonists are more concerned about power and not what they may hold in Western capitals or elsewhere.

Macharia Munene, an international relations lecturer at Nairobi’s United States International University, said the UN was free to ask its member states to freeze assets, but added that hardly any national conflicts were resolved that way.

“The protagonists in Central African Republic are interested in power and are probably not worried about some assets they may hold in London or Nairobi or elsewhere,” said Prof Munene.

Kenya Bankers Association CEO Habil Olaka, however, said he had not received the circular, but noted that there was a system in place to deal with issues of money laundering such as involves freezing of assets