Lenders flouting safe deposit boxes rules, says CBK

CBK Governor Patrick Njoroge. FILE PHOTO | NMG 

By BRIAN NGUGI
More by this Author

The Central Bank of Kenya (CBK) is currently looking for ways to tackle abuse of safe deposit boxes following the recent discovery of their misuse at Barclays Bank of Kenya.

Responding to queries on whether the country’s banking sector is suffering from the regulator’s weak
oversight over the safe deposit boxes services, CBK Governor Patrick Njoroge maintained there were adequate controls but were flouted by the lender. He said the bank abused rules by allowing fake currency inside its vaults.

“What we are discovering now is that there is a misuse of safe deposit boxes that is going on,” Dr Njoroge said at a media briefing in Nairobi last Thursday following Wednesday’s Monetary Policy Committee (MPC) meeting.

“We will find a way to go around this and no one should be worried,” he added.

Barclays Bank has since put a freeze on new safe deposit box services as investigations into Sh2 billion fake dollars found at its Queensway Branch in Nairobi continue.

Barclays Kenya CEO Jeremy Awori consequently said a review of the bank’s current safe deposit boxes is also underway following the raid by Directorate of Criminal Investigations (DCI) detectives.

“Whilst we have operated the safe deposit box service in line with local and global regulatory requirements, we recognise the emergence of new financial crime risks associated with the use of this service. Therefore, as an extra precaution, we have taken a decision not to take any new safe deposit boxes,” said Mr Awori earlier.

Another box said to contain fake gold was impounded at the same Barclays branch, also registered under the name of Erick Adede, the main suspect in the scam.

“We have robust processes to ensure that all currency dispensed over our counters and ATMs is genuine and that items held in safe deposit boxes are separate from the bank deposits.”

The bank also called in sniffer dogs experts at its storage vaults to confirm that there is no threat posed by the items contained in the safe deposit boxes.