Regulator warns banks against fake ‘saccos’

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Aug 4, 2017 , ,
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By David Kipkorir.

The Central Bank of Kenya (CBK) has warned banks and financial institutions against opening accounts for fake pyramid schemes operating as saccos.
Central Bank of Kenya in a circular urged banks to ensure they scrutinise transactions where non-deposit taking saccos mobilise huge sums from unsuspecting Kenyans.
“This circular is to caution financial institutions against dealing with or offering any services to any unlicensed entities undertaking activities involving mobilisation of funds from the public,” wrote Director of Bank Supervision at CBK Mr. Gerald Nyaoma.
There has been proliferation of businesses duping Kenyans to save and buy land or stagger payments for off-plan houses only to close shop and take off with their savings.
CBK wants to rein in banks and micro-finance institutions that help channel money to the fraudsters. It said banks must establish who owns each account, ask for details about how the business operates, conduct ongoing due diligence and monitor transactions of the non-deposit taking saccos
“Institutions are also advised to report immediately to CBK entities suspected to be involved in such activities or else face administrative action”, said Nyaoma.

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