Tracing third-party depositors
How long should it take a commercial bank to trace a third-party depositor of cash into a bank account, especially with technology such as closed circuit television (CCTV) surveillance cameras in place? How do such depositors get account details of the beneficiary account?
What is the role of banks in regulating such deposits? How far do the banks’ know-your-customer (KYC) parameter extend?
These are some of the questions that have been bothering me, and I bet several others, since news broke last week that Anti-Corruption Bureau (ACB) director general Lucas Kondowe had a strange K2 million cash deposit in his personal bank account held at First Merchant Bank (FMB) Blantyre Branch.
Smelling a rat, especially given his official position that demands a high degree of integrity, Kondowe raised an alarm. He queried the bank to find out the source of the deposit and, upon seeing that it was someone he did not know, he informed the Inspector General (IG) of Police about it.
The rest is history as the Malawi Police Service (MPS) is “investigating the matter”.
Today it is Kondowe. The other day, in the thick of the campaign for the May 20 Tripartite Elections and the mudslinging that goes with it, it was another respected son of the land, Malawi Supreme Court of Appeal judge Maxon Mbendera, whose name was maliciously linked with a deposit into the bank account of one of the presidential candidates.
Both Kondowe and Mbendera are prominent personalities holding positions of integrity in society.
I believe there are scores of such mysterious deposits or financial transactions which go unreported.
These developments should pose a challenge to the Bankers Association of Malawi (BAM) and other stakeholders to start thinking about how banks should be handling over-the-counter cash deposits, especially those involving large sums.
It is easy to trace electronic funds transfers and, in my view, given the CCTV technology in banking halls, it should be even easier to track a third-party cash depositor over-the-counter. Unless, perhaps, the CCTV cameras we see are mere scarecrows.
My basic understanding of operations of banks is that, in the spirit of client confidentiality, banks are not allowed to give account details of their customers to a third party unless advised otherwise by the account holder. Of course, one cannot rule out some elements within the system leaking the details to third parties.
When taking deposits, banks do not demand more information other than the name of the depositor and their telephone number. In contrast, when withdrawing the same money, the banks want the customer or third party to produce a valid identity document, besides, in some cases, cross-checking or verifying with the customer.
I have seen deposit slips in some banking halls, notably Malawi Savings Bank (MSB), Ecobank and FDH Bank, asking depositors to indicate the source of the money they are depositing. However, I am not sure the banks authenticate the information provided.
In the wake of increasing money laundering crimes, I feel it is time BAM and the Reserve Bank of Malawi (RBM) considered enhancing the safety of customers by seeking more information from cash depositors. This could be done by way of having a maximum threshhold of cash that can be deposited, beyond which cheques or other instruments could be used.
In other words, commercial banks should be more serious with cash deposits in the same manner they do with withdrawals. It would not be asking for too much to get the depositor’s ID.
