Branches of Charterhouse Bank remain closed today to customers despite a vague order given by an Eldoret Court was followed by jubilant employees of the Bank (dancing on TV) promising that it was only a matter of time before the bank resumed operations.
CBK’s argument that money laundering was the reason for placing Charterhouse under statutory management was never strong and whether any laws were broken remains in doubt. Charterhouse was not a bank in danger of collapse and has fought the order from day one. The bank had 3.1 billion shillings in deposits, loans of 2.7b and even reported a 76 million profit in the half-year to June before it got embroiled in the Nakumatt tax evasion furore.
Money laundering is closely linked to tax evasion and KRA has been pressing banks to scrutinise customer transactions for suspicious activity while international authorities have also been urging banks to monitor for terrorist-related funding/transactions.
Smaller banks seem to be the preferred choice for many business people as they allow greater flexibility and accommodations including late deposits, high-interest rates on deposits, and unauthorized temporary overdrafts.