aml kyc policyv2 _2_

8/7/2019 AML KYC PolicyV2 _2_

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Version 2.0 May 2009

Ownership

This document is owned by the Head of Compliance who is responsible for ensuring that it remains accurate and up-to-date at all times.

No changes may be made to this document, nor copies availed to any party external to Fina Bank without the prior written approval of the

Head of Compliance.

Copyright

This document contains proprietary information that is protected by copyright. All rights are reserved. No part of this document may be

photocopied, reproduced or included in any published document, circular or statement nor published in any way or translated into anotherlanguage without the prior written approval ofFina Bank LTD, Po Box 20613 00200 Nairobi of the form and context in which it may

appear.

Fina Bank LTD 2009

Your Partner in Growth and Development

Anti-Money Laundering and KnowYour Customer (KYC) Policy


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Fina Bank LTD - Anti-Money Laundering and Know Your Customer (KYC) Policy

Fina Bank LTD Company ConfidentialPage 3 of 26

Amendments Page

Date Status: In-progress/complete

Chapter/Section/Page Number

Description of Amendment/Reference Number

Manualupdated by:

(name)

Head ofDepartment

TeamLeaders

Initials

March2007

Complete 14,15,16 & 17 Sect:3.1.3,4,5,6,7,8 & 9 C AmangaCA

April2009

Complete5,14,15,16,17,18 & 19

Sect:1.3,2.5.2.6,3.1.2,3.1.3

,3.1.4,3.1.5,3.1.6,3.1.8 &3.2.0

C Amanga CA


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Chapter 1: Overview

1.0

Introduction

In response to various worldwide terrorist and other criminal activities, the internationa

community through bodies such as the Financial Action Task Force (FATF) has sought t

ensure that the global financial network is not used to facilitate criminal activity. In thregard, the FATF has issued a number of recommendations that are now widel

recognized as standards for combating money laundering and financing of terrorism.

The FATF has 5 FATF-style regional bodies (FSRB) and more than 15 other internationaorganizations or bodies. Kenya is a member of one of the FSRB i.e. Eastern and Souther

Africa Anti-Money Laundering Group (ESAAMLG). Kenya also happens to be a signatory tthe major international protocols relating to anti-money laundering (AML), corruption

trans-national crime and combating terrorism.

Pursuant to powers conferred to it by part VII - section 33(4) of the Kenyan Banking Act

the Central Bank of Kenya (CBK) has issued various prudential guidelines on proceeds ocrime and money laundering (prevention) that all banks in Kenya are required to comply

with. These guidelines center on the Know Your Customer (KYC) concept.

Fina Bank, being a responsible player in the Kenyan banking sector complies with aregulatory guidelines and adheres to sound banking practices both locally an

internationally. It must also be noted that failure to comply with any of the CBK

Prudential Guidelines relating to money laundering by any of our staff constitutes criminal offence whether or not money laundering has taken place.

In addition to penalties for breaches, any involvement in money laundering activitiewould cause severe damage to our Banks reputation and could ultimately lead to thwithdrawal of our banking license.

1.1

PurposeThe purpose of this document is to provide policy guidelines and act as a referencdocument for all Fina Bank staff on AML and KYC matters. It will also be used to guide th

implementation of AML and KYC internal compliance measures within Fina Bank.

This document does not however replace the need for each employee of Fina Bank to usehis/her own judgment/intuition guided by all relevant Bank policies and procedure

(written or otherwise) towards the prevention of money laundering.


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1.2

Scope

Among other things, this document contains guidelines for prudent customer

identification, record keeping, identification of suspicious activities and the internalprocess for reporting such activities.

The policies outlined in this document apply to all functions, departments and employees

of Fina Bank.

These policies also apply to all transactions entered into by Fina Bank with any customer

regardless of whether that person is an account holder at Fina Bank or not.


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1.3

KeyDefinitions

The table below provides definitions for some of the key terms used in this document:

Term Definition

MoneyLaundering

This refers to the act of a person who engages (directly orindirectly) in a transaction that involves the proceeds of any

unlawful activity.

It includes acquiring, receiving, possessing, disguising, transferring,converting, exchanging, carrying, disposing, using, removing or

bringing into the country proceeds of any unlawful activity.

It also includes concealing, disguising or impeding the

establishment of the true nature, origin, location, movement,deposition, title of, rights with respect to or ownership of proceeds

of any unlawful activity where:

As may be inferred from objective factual circumstances, theperson knows or has reason to believe that the property is

proceeds from any unlawful activity.

In respect of the conduct of a natural person, the personwithout reasonable excuse fails to take reasonable steps toascertain whether or not the property is proceeds from anyunlawful activity.

Person Any natural or legal entity.

Proceeds of

Crime

Any property or economic advantage derived or realized (directly or

indirectly) as a result of or in connection with an offenceirrespective of the identity of the offender and irrespective of

whether committed before or after the passing of the Proceeds ofCrime and Money Laundering (Prevention) Act and includes on a

proportional basis, property into which any property derived or

realized directly from the offence was later successfully converted,transformed or intermingled, as well as income, capital or othereconomic gains derived or realized from such property at any time

since the offence.

Know YourCustomer

(KYC)

The Central Bank of Kenya (CBK) requires a financial institution totake reasonable measures to satisfy itself as to the true identity of

any applicant seeking to enter into a business relationship with it,or to carry out a transaction or series of transactions with it. Such

measures include requiring the applicant to furnish the institution

with certain key documents.

This concept is commonly referred to as Know Your Customer

(KYC).

PoliticallyExposed

Persons(PEPs)

Politically exposed persons (PEPs) are individuals who are or havebeen entrusted with prominent public functions. In recognition of

the risks involved, the Bank shall endeavor to gather sufficientinformation from a new customer, and check publicly available

information, in order to establish whether or not the customer is a

PEP.The bank shall investigate the source of funds before accepting PEP.


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1.3

KeyDefinitions

Continued

The table below provides definitions for some of the key terms used in this document:

Term Definition

PoliticallyExposed

Persons(PEPs)

The decision to open an account for a PEP shall be taken at a seniormanagement level.

Examples of customers requiring higher due diligence in addition toPEPs may include:-

Non-residents customers High net worth individuals Trusts,charities,NGOs and organizations receiving donations Companies having close family shareholding or beneficial

ownership

Non-face to face customers Those with dubious reputation as per public information

available, etc.

ComplianceAssessments

Compliance Officer shall arrange to visit each business unit at least once a year tperform Anti-Money Laundering (AML) and Know Your customer (KYC) assessment

which shall serve as performance indicators.

Policy review This policy document shall be subjected to review after every two years. Howeve

amendments shall be done as and when they come by to ensure the documenremains current and live.


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1.4

KeyResponsibilities

Person(s) Key Responsibility

Board of

Directors/Board Risk

ManagementCommittee/

Management

1. Establish and implement appropriate policies and proceduresto guard against money laundering and terrorism financing.

2. Establish adequate internal control measures, which willassist in the prevention and detection of money laundering

activities.

3. Ensure that all employees are trained on a regular basis inthe prevention, detection and control of money laundering

and the identification of suspicious transactions.

4. Ensure timely reporting to the CBK of any suspicioustransactions or activities that may indicate money launderingor other attempts to conceal the true identity of customers or

ownership of assets.

Head ofCompliance

1. Advice management on appropriate AML policies.2. Coordinate the development, implementation and review of

AML policies and procedures.

3. Promote compliance to AML policies throughout the Bank.4. Coordinate the development and delivery of appropriate AML

training to all Fina Bank employees.

5. Receive reports of suspicious transactions from Bank staffand in turn make the necessary reports and returns to CBK.

6. Periodically circulate to all staff a list of persons appearing onthe UN Sanctions list.

7. Provide effective linkage between the Bank and external AMLauthorities/agencies.

8. Take necessary action to ensure that thorough investigationsare conducted internally into any reported suspicious

activities /transactions.

9. Participate in AML events.All Fina Bank

Employees

1. Undergo periodic training and keep abreast of the latest AMLmeasures.

2. Adhere to the policy guidelines contained in this documentand other relevant Bank documents.

Continued on next page


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1.4

KeyResponsibilities,

continued

Person Key Responsibility

All Fina Bank

Employees,continued

3. Immediately report to the Head of Compliance anytransactions suspected to be related to drugs, terrorism andother forms of crime or the detection of a person appearing

on the UN Sanctions List.

4. Not to in any way reveal to anyone that a customer is beinginvestigated or that they are principal suspects in any such

investigation, but to immediately forward any suchinformation to the Head of Compliance.

5. Obtain and retain certified copies of proper identificationdocuments of customers wishing to open accounts or make

any other transactions with the Bank whether directly orthrough proxy.

6. Establish whether any person wishing to open an account ormake any other transaction with the Bank is acting on behalfof another person and take necessary measures to establish

the true identity of the proxy or the ultimate beneficiaries ofsuch transactions, be they trustees, nominees or agents.

7. In accordance with the Banks operating procedures, obtainadequate records regarding the sources of funds and details

of transactions and maintain such records for a minimum ofseven (7) years.

8. Not to open or maintain any anonymous account or anaccount in an obviously fictitious name.

NB: The responsibility of detecting, preventing and reporting money-launderin

activities rests squarely on each individual member of staff.


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Chapter 2: Anti-Money Laundering (AML)

2.0Introduction

The main objective of money laundering is to exchange the initial proceeds of an illegaactivity with a financial asset or other valuables to give legitimacy to such proceeds an

to conceal the true source of the funds.

All Fina Bank employees are required to always remain vigilant and take reasonabl

measures to ensure that criminals do not use the Bank to conceal or transfer thproceeds of or to finance their unlawful activities.

This chapter provides further details on how to prevent, detect and report any suspecte

money laundering activities within the Bank.

2.1Main Money

LaunderingOffences

The following are the main money laundering related offences that all Fina Bank stafmust guard against:

1. Assisting a money launderer to conceal, retain or invest funds, if the person knowor suspects the funds are the proceeds of criminal conduct. We must immediatelyreport our suspicions to the Head of Compliance as outlined in section 2.4 of thi

document. [It is a defense that the person concerned has reported his/he

knowledge or suspicion].

2. Tipping off, informing the person who is the subject of a report that the authoritieare acting or are proposing to act in connection with an investigation into money

laundering.

3. Failure to report as soon as is reasonably practical, knowledge or suspicion of monelaundering acquired in the course of the persons trade, profession, business o

employment.

These offences are punishable by law according to guidelines set by the CBK. Internadisciplinary measures within the Bank also apply.


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2.2Stages of

MoneyLaundering

There are numerous methods employed by criminals in an attempt to clean their dirtmoney. These methods may involve numerous transactions but largely involve three ke

stages as described in the table below:

Stage Description

Placement This refers to the physical disposal of the initial proceeds of an illegalactivity into a financial system. This may happen in one of several ways

such as:

Direct deposit in a financial institution (This could take the form of asingle deposit or several small deposits into one or several accountsmade by one or more individuals).

Purchase of goods/services. Smuggling the funds out of the country. Use of cash to purchase banking instruments such as drafts, travelers

cheques, international money orders, foreign currency etc.

Layering During this stage, criminals seek to separate the illicit proceeds fromtheir source by creating complex layers of financial transactions aimed atdisguising the origin of the funds and the identity of the true owner while

concealing the audit trail.

Layering can be achieved through several means including:

Purchase of valuables such as jewelry, real estate etc. Early repayment of debt obligations inconsistent with the persons

genuine regular income.

Buying and selling of bonds, shares and other money marketinstruments. Dealing in banking instruments such as drafts, travelers cheques,

international money orders, and foreign currency.

Integration If the layering process succeeds, the criminals then craft an integrationscheme whereby the laundered proceeds are placed back into the

economy. This is done in such a way that the proceeds re-enter the

financial system appearing as legitimate business funds.

The criminals are then able to withdraw or otherwise transact with the

money without attracting suspicion.

Integration can be achieved in various ways such as:

Making withdrawals from bank accounts. Disposal of items initially purchased through the illicit money. Repayment of debt obligations such as mortgages etc.



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2.2Stages of

MoneyLaundering,

Continued

The three key stages described above can occur as separate and distinct phasessimultaneously or in an overlapping manner depending on the needs of the criminal

and the available mechanisms and loopholes in the financial system.

It must be noted that criminals are constantly coming up with new and sophisticate

ways of laundering their ill-gotten gains. This therefore calls for constant alertness andue diligence on the part of all Fina Bank employees.

2.3Identifying

Suspicious

Transactions

To determine whether a transaction is suspicious or not, it is necessary to have a cleaunderstanding of the pattern of the concerned customers nature o

business/occupation and their prior account conduct. Suspicious transactions ma

arise at any stage and frequently occur within an established business relationshirather than at the outset.

Below is a list of some key questions that each member of staff should alway

consider whenever handling customers and their transactions:

Is there anything unusual about the customers behavior or mannerisms? Has the customer shown any reluctance or difficulty in providing information o

details?

Has the pattern of the customers transactions recently changed? Is the size and nature of the transaction consistent with the clients source o

income and prior account conduct?

Are any of the customers transactions linked to high-risk regions of the World?

Are any foreign currency transactions consistent with the customers occupation

business dealings etc.

Please refer to appendix 1 for a list of suspicious activities to watch out for.

2.4

Reporting

SuspiciousTransactions

Any member of staff who becomes aware of suspicious activities or transactions

which indicate possible money laundering activities, must immediately report th

matter to the Head of Compliance or any member of Executive Committee througthe telephone.

After reporting the matter through telephone, the concerned staff must complete

Suspicious Activity or Transaction Report (SATR) [see appendix 2] and have threport signed off by the Branch/Department Manager. The Branch/Departmen

Manager must ensure that a copy of the SATR is faxed to the Head of Compliance an

then forwarded through the internal mail.

The Head of Compliance in consultation with the Managing Director must in turimmediately report the matter to Financial Institutions Supervision, Central Bank o

Kenya on form CBK/IF 8 providing sufficient details regarding the activities otransactions to enable CBK investigate and take appropriate action.


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2.5UN Sanctions

List

The UN Security Council Sanction Committee designates and periodically issues lists oindividuals or entities suspected to be linked to terrorism.

The Head of Compliance shall on quarterly basis circulate the most up-to-date

sanctions list to all staff in the Bank. Each member of staff must be on the lookout for

persons included in the list and must immediately report to the Head of Compliance bytelephone any attempts by any such listed person to transact with the Bank in any

way.

The Head of Compliance shall immediately declare the detection of any such person oentity to CBK.

On quarterly basis the Head of Compliance shall prepare and submit to CBK a return

on the UN 1267 list.

2.6

Confidentialityof I nformation

All information relating to any suspicious activities or transactions must be treate

with strict confidence.

Members of staff who become aware of such activities or transactions must nodisclose such information, other than to report the matter to the Head of Complianc

who will take action as per the laid down procedures.

2.7

Training andAccreditation

Every Fina Bank member of staff must undergo training on anti-money launderin

measures. The training must be refreshed at least once every two year with stafbeing accredited after passing a compulsory test on AML measures.

The Head of Compliance is charged with the responsibility of organizing thtraining/accreditation and keeping proper records evidencing this.

2.8Reports

The Head of Compliance shall on a quarterly basis submit summary reports in regarto suspicious transactions, KYC issues and staff training and accreditation to the Boar

Risk Management Committee.


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Chapter 3: Know Your Customer (KYC)

3.1.0Introduction

To safeguard Fina Bank from being used by criminals to further their illegal activitiesit is necessary that the Bank fully understand its customers and their transactions. Th

Bank shall therefore capture and maintain vital information regarding its customers.

In all initial dealings with customers, Fina Bank staff shall ascertain the nature obusiness that the customer expects to conduct with the Bank so as to determine wha

might be expected as the customers normal activity levels.

The CBK requires all institutions licensed under the Banking Act to among othe

things:

1. Obtain and maintain proper identification of customers wishing to open accounts omake transactions whether directly or through proxy.2. Obtain and maintain adequate records regarding the sources of funds and detail

of transactions.

This chapter outlines measures to be adopted throughout the Bank as part of the

Know Your Customer (KYC) concept.

3.1.1When Identity

Must BeVerified

In all transactions, Fina Bank employees shall satisfy themselves that they are dealingwith a person that actually exists and identify those persons that are authorized t

undertake the transactions whether on their own behalf or on behalf of others.

Where a person has requested to enter into any transaction with the Bank on behalf o

another person, staff shall take necessary measures to establish the true identity othe person on whose behalf or for whose benefit the applicant may be acting in the

proposed transaction whether as a trustee, nominee, agent or otherwise.

Staff shall obtain and verify the genuineness of suitable identity documents whenever

1. Any person seeks to open an account with the Bank.2. Any person seeks to undertake an occasional or one off transaction with the Bank.3. There is cause to be suspicious.4. There is doubt about the veracity or adequacy of previously obtained custome

identification information.


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3.1.2Acceptable

IdentityDocuments

We shall take reasonable measures to satisfy ourselves as to the true identity of anapplicant seeking to enter into a business relationship with the Bank or to carry out

transaction or series of transactions with the Bank.

This requirement shall be achieved by requiring the applicant to produce a valid an

acceptable official record reasonably capable of establishing the true identity of thapplicant.

Below is a list of identity documents acceptable to the Bank:

Identifying Residents

1. National Identity Card.2. Valid Passport.3. Birth Certificate (Minors only).Identifying Non-Residents

1. Valid Passport.2. Entry Permit/ Alien Certificate.3. Work permit where applicable4. Or any other legally acceptable identification documents


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3.1.3Personal

Customers

All individuals seeking to enter into a personal account relationship with Fina Banshall furnish the Bank with the documents outlined below or as it is applicable:

1. 1 recent colored passport sized photograph.2. Acceptable identity document (see section 3.1.2).3. Physical address of current residence verified by either;

A utility Bill e.g. electricity, telephone or water bill. Government/Local Authority Bill e.g. land rates/rates Title deed or lease agreement

The document provided for this purpose should be in the customers name.Where it is practically impossible to obtain and verify physical address, the

management can use their discretion to decide on whether to proceed or not.

4. Letter from employer or other document evidencing source(s) of income.5. 3 months previous bank statements (where applicable) or6. Introduction from an existing customer who must have held an account with Fin

for at least three months or

7. Written confirmation from the customers prior bank attesting to the customeridentity and history of account relationship (bank reference).

8. For accounts with more than one party and where one of the parties has identifiedthe others, written confirmation to the effect that the first party has known thother(s) personally for at least 12 months.

9. PIN Certificate where applicable. Some individuals income is below taxthreshold.

The Bank official dealing with the customer shall verify the genuineness of the

documents and retain certified copies in the customers file.

3.1.4Minors

A legal parent or guardian seeking to open an account for a Minor, shall furnish thBank with originals and copies of the documents outlined below:

1. Birth Certificate of the Minor evidencing nationality and date of birth.2. Acceptable identity document of the legal parent/guardian (see section 3.1.2 o

acceptable identity documents).

3. Physical address of current residence for both the Minor and the legal

parent/guardian verified as provide for in sect 3.1.3 number 3.

4. Documentary evidence showing source of funds/income.5. Recent colored passport sized photograph of the parent/legal guardian.


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3.1.5

Limited

Companies

The directors of limited companies seeking to enter into an account relationship wit

Fina shall furnish the Bank with the documents outlined below or as it is applicable:

1. Acceptable Identity Documents for all the directors and proposed accounsignatories (see section 3.1.2 on acceptable identity documents).

2. PIN Certificates for the company and all the directors and proposed accounsignatories.

3. Certificate of Incorporation.4. Memorandum and Articles of Association.5. Board resolution on company letterhead stating authority to open accounts

transact business and borrow funds and designating persons having signator

authority thereof.

6. Business permits.7. Audited financial statements covering at least the last full year (where applicable).8. Copy of latest annual returns.(where applicable)9. Introduction from an existing customer who must have held an account with Fin

for at least three months.

10.Physical address of current residence of the chairman of the board of directors omanaging director verified by recent utility bills i.e. electricity, telephone or watebill, Government/Local Authority Bill, Title deed, lease agreement or by a lette

from a suitable referee.

11.Where applicable, written confirmation from the customers prior bank attesting tthe customers identity and history of account relationship.


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3.1.6Partnerships

Business partners seeking to enter into an account relationship with Fina shall furnisthe Bank with the documents outlined below or as it is applicable:

1. Acceptable identity documents and PIN Certificates for all the partners (see sectio3.1.2 on acceptable identity documents).

2. Certificate of registration.3. Physical address of current residence of at least two partners (general partner and

at least one limited partner) verified as stated in sect 3.1.3 number 3.

4. Resolution on company letterhead stating authority to open accounts, transacbusiness, borrow funds and designating persons having signatory authoritthereof.

5. Business permit.6. Audited financial statements covering at least the last full year (where applicable)

(Un-audited statements may be substituted upon the written approval of

member of Bank management).

7. Introduction from an existing customer who must have held an account with Finfor at least three months.

8. Where applicable, written confirmation from the customers prior bank attesting tthe customers identity and history of account relationship.

NB: When signatories to the mandate change, care must be taken to ensure that the

identity of at least two of the current signatories has been verified.

3.1.7Sole

Proprietors

Sole Proprietors seeking to enter into an account relationship with Fina shall furnisthe Bank with the documents outlined below or as it is applicable:

1. Recent colored passport size photograph.2. Acceptable identity document (see section 3.1.2 on acceptable identity

documents).

3. PIN Certificate.(where applicable in relation to tax threshold)4. Certificate of Registration.5. Business permit.6. Physical address of current residence verified as stated in sect 3.1.3 number 3.7. Introduction from an existing customer who must have held an account with Fina

for at least 3 months or from a suitable referee.

8. Where applicable, written confirmation from the customers prior bank attesting tothe customers identity and history of account relationship.


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3.1.8

Clubs,Associations,

CharitiesAnd Societies

Officials of Clubs, Associations and Societies seeking to enter into an account

relationship with Fina shall furnish the Bank with the documents outlined below or as is applicable:

1. Acceptable identity documents for all the proposed account signatories [at least 2signatories] (see section 3.1.2 on acceptable identity documents).

2. Recent colored passport size photos for the proposed account signatories (at leas2 signatories).

3. PIN Certificates (where applicable) for the proposed account signatories (at least signatories).

4. Physical address of current residence of at least two signatories verified as statedin sect 3.1.3 number 3.

5. Certificate of registration.6. Entity rules/constitution/by laws.7. List of managing committee members.8. Resolution on entity letterhead stating authority to open accounts, transact

business and borrow funds and designating persons having signatory authority

thereof.

9. Where applicable, written confirmation from the customers prior bank if any,attesting to the customers identity and history of account relationship.

10.Audited financial statements covering at least the last full year (where applicable)(Un-audited statements may be substituted upon the written approval of

member of Bank management).

11.NGO charter where applicableNB: When signatories to the mandate change, care must be taken to ensure that theidentity of at least two of the current signatories has been verified.

3.1.9

Trustees

Satisfactory verification of identity for Trustees can be based on the inspection o

formal documents concerning the Trust, which confirm the names of the curren

Trustees and their addresses for correspondence.

Verification can also be based on extracts from Public Registers or references fromProfessional Advisors or Investment Managers.

The identity of at least two Trustees must be verified.

Establish the identity of the ultimate beneficiaries of the trust.

Other requirements are as per section 3.1.8 on clubs, associations and societies.


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3.2.0Non-Kenya

Residents

Where non-Kenyan residents wish to open accounts without face-to-face contact, it mnot be practical to seek sight of a passport or any other identification documents. T

following alternative measures may be taken:

1. Use of our correspondent bank in the respective country to confirm the persoidentity or as an agent to check personal verification and address details.

2. For countries where we do not have correspondent banks, a copy of the passpauthenticated by an attorney, notary or consulate could be obtained.

3. An account opening reference could also be obtained from a reputable credit financial institution in the applicants home country. Verification details should

requested covering true name or names used, current permanent address, datebirth and verification of signature.

NB: Fina Bank does not however encourage the opening of accounts without face-

face contact. As such, the measures outlined above should only be taken as a last res

and with the approval of a member of management.

3.2.1

Supporting

Documents

To enable the Bank determine the legitimacy of funds or certain transactions, custom

shall be requested to produce documentary evidence as outlined in the table below:

Activity/ Transaction Minimum Acceptable Supporting Info rmation

Large, frequent or unusualcash deposits or

withdrawals:

Written statement from the customer confirming thatthe nature of his/her business activities normally and

reasonably generates substantial amounts of cash.

Large, frequent or unusual

currency exchanges:

Written statement from the customer confirming the

reason and need for acquired currencies.

Multiple or nomineeaccounts or similar or

related transactions:

Written statement from the customer confirming thereason and need for multiple or nominee accounts or

similar or related transactions.

Large, frequent or unusualtransfers or payments of

funds:

Appropriate documentation as to the identity of therecipient (or sender) of the transferred or paid funds

and the reason underlying the transfer or payment.

Large or unusual

investments or requests

for advice or services:

Written statement from the customer confirming that

the investments or advice or services being requested

are bona fide and consistent with the goals and

objectives of the customers reasonable and normalbusiness activities.

Large or unusual foreigntransactions:

Written confirmation from the customer indicating thenature, reason and appropriate details of the foreign

transactions sufficient to determine the legitimacy ofsuch transactions.


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3.2.2Record Keeping

Each customer account in the Bank shall be kept in the true name of the accounholder.

All records regarding sources of funds and details of customers transactions with th

Bank shall be maintained for a minimum ofseven (7) years.

Such records are vital for:

1. Enabling the identification of unusual or suspicious transactions.2. Helping to reconstruct individual transactions.The customer records retained and maintained by the Bank must contain particular

sufficient to identify:

The name, physical and postal address and occupation or where appropriatbusiness or principal activities of each customer who is:

Conducting the transaction or On whose behalf the transaction is being conducted.

The nature, time and date of transaction. The type and amount of currency involved. The type and identification of every account with the Bank. If the transaction involves a negotiable instrument other than currency:

The name of the institution on which it is drawn. The name of the payee (if any) of the instrument and details of an

endorsements approving the instrument.

The name of the employee or agent of the Bank who prepared the record.


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Appendix 1


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List of Suspicious Activities

The table below contains a list of activities or transactions that may indicate possible money laundering

activities. The list is however not exhaustive and does not in any way replace the need for each member of

staff to always remain vigilant and exercise sound judgment in all situations.

Activity/ Transaction

1. Account activity (e.g. large, frequent or unusual deposits, withdrawals, payments or exchanges of cash,foreign currency or negotiable instruments), which is not consistent with or reasonably related to the

customers normal business activities or financial standing.

2. Use of multiple or nominee accounts or similar related transactions, which are not consistent with thecustomers normal business activities, financial standing or indicated reasons thereof.

3. Consolidation of multiple smaller accounts at several institutions within the same locality prior torequest for onward transmission of funds elsewhere.

4. Reluctance to provide reasonable information and documentation when opening an account or inconnection with a requested transaction, investment, advice or service or the providing of information

which is unreasonably difficult or expensive to verify.

5. Transactions or account activity, including transfers of funds abroad or use of foreign travel and trade-related instruments, where the use or involvement of funds is not consistent with the customers normal

business activities, financial standing or indicated reasons thereof or where the destination country is aknown or suspected tax haven or drug trafficking country.

6. Requests by a customer to provide/arrange/participate in credit facilities where the source of thecustomers contribution is unclear or not consistent with normal business activities or financial standingor involves real property.

7. Matching of cash deposits/withdrawals with payments or transfers out/in.8. Deposits of large third party cheques endorsed in favour of the customer.9. Large or unusual activity in dormant/inactive accounts.10.Deposit of cash by means of numbered credit slips so that the total of each deposit is unremarkable but

the total of all the credits is large.

11.Customers who open numerous accounts and pay in amounts of cash to each of them in circumstancesunder which the total credit would be a large amount.

12.Company accounts whose transactions, both deposits and withdrawals are dominated by cash ratherthan the forms of transactions normally associated with commercial operations (e.g. cheques, letters of

credit, bills of exchange etc.).

13.Customers who wish to maintain a number of trustee or clients accounts which do not appearconsistent with the type of business and transactions which involve nominee names.



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List of Suspicious Activities, Continued

Activity/ Transaction

14.Customers who seek to exchange large quantities or low denomination notes for those of higherdenomination.

15.Request to borrow against assets held by the bank or a third party where the origin of the assets is notknown or inconsistent with the customers standing.

16.Use of: Shell companies Parallel accounts Non-profit making organisations such as NGOs Casinos and gambling establishments Informal money transfers through Hawalas.17.Concealment of funds within the Banks internal accounts e.g. deposits made into suspense accounts.18.Persons using false identities or documents.19.Accounts opened by legal entities or organisations where the individuals serving as directors or

members are directors or members of other legal entities having the same address or location.

20.Multiple transactions carried out the same day on the same account.21.Multiple wire transfers involving relatively small amounts.22.Transfers/deposits into an account with the funds shortly thereafter transferred out to an offshore

jurisdiction.

23.Dealings with foreign political figures.


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Appendix 2


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To: Head of Compliance (Head Office)

From Branch/Department

Date(DD/MM/YY)

SuspectsNamesRelationship ofSuspect With theBank (E.g. Customer, staff, director, shareholder, supplier, agent etc.)Account Number

Account Name(s)

Postal Address

Occupation/ Natureof Business

Employer/ BusinessName

Date of Birth(DD/MM/YY)

ID Document(e.g.Passport, DL etc.) Type: Number:Date AccountOpened (DD/MM/YY)

Account Opening

Reference(Letter ofIntroduction or Bankreference)

Type: Referees Name:

Date of SuspiciousActivity/ Transaction (DD/MM/YY)

Amount Involved(KSHS)

Full Details ofSuspiciousTransaction/ Activity(attach a dated andsigned separate sheet ifnecessary).

SupportingDocuments

Please attach to this form copies of relevant documents such as: ID Account opening forms/mandates Account statements for the last one-year. Transaction voucher(s) etc.

Name of I ndividualwho Detected theActivity/ Transaction

Branch/ DepartmentManager

Name: Signature:


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This revised policy document was approved by Board Risk Committee on:-

Date

On behalf of Board;

Director:

Name: . Signature.