CEOs in tight spot on corporate breaches
Tuesday January 19 2021
Summary
Over the past couple of years in Kenya, we have seen increased regulatory reforms championed by local regulators, notably the Central Bank of Kenya (CBK), the Capital Market Authority (CMA), the Financial Reporting Centre (FRC) and the Insurance Regulatory Authority (IRA).
Some of the corporate conduct breaches that management and directors may be held personally liable for include violations related to customer data privacy and financial crimes relating to money laundering and terrorism financing.
The global financial crisis of 2007-2008 will long be remembered for the turmoil it caused to the banking industry. Some well-established banks previously thought to be too big to fail came crumbling down overnight.
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Policy
The bank typically contacts the company with short notice, somewhere around thirty days is the average. It comes in a phone call. Nothing is written down by the bank that can create a paper trail that the denial was based on arbitrary prejudice against a company. The termination letters say only that on such and such a date all accounts will be closed, any outstanding fees deducted from balances, and cashier’s checks will be mailed to the former customer. No regrets. No goodbyes. This is gaslighting, the business edition.
Cloak and Dagger Bullying
It is a dark, murky, under the table world when a bank decides to cut off lending, credit and services to a firearms company. It leaves companies bullied, fearful and gun shy. Even after finding a new banker, which typically takes three to four attempts, their lawyers counsel flying low to avoid the radar.