Five Kenyan Banks have been issued with substantial fines by the Central Bank of Kenya (CBK) for allegedly channeling illegally acquired National Youth Service (NYS) funds.
Kenya Commercial Bank, Equity Bank, Standard Chartered Bank, Diamond Trust and Cooperative Bank of Kenya were levied a total of Sh349 million after investigations by CBK revealed that the banks were used to channel funds illegally acquired in the second phase of the NYS scandal.
Among the five banks, KCB was issued the largest financial fine of Sh149.5 million, Equity Bank came in second with a fine of Sh89.5 million while Standard Charted rounded off the top three with a Sh77.5 million fine.
Diamond Trust Bank and Co-operative Bank of Kenya came in fourth and fifth with the pair being issued a Sh56 million and Sh20 million fines respectively.
According to a statement issued by the Central Bank of Kenya on Wednesday, a sum of Sh3.6 billion was routed through the five banks, with the largest amount of Sh1.6 billion being funneled via Standard Chartered Bank.
Equity bank and KCB are stated to have moved Sh886 million and Sh639 million respectively while Diamond Trust Bank facilitated Sh162 million from the NYS plunder.
In the statement the CBK also explained that the fines were issued based on the degree of violations the banks had committed such as failing to report large cash transactions, failing to undertake adequate customer due diligence, failure to produce supporting documentation for large transactions and failure to report suspicious transaction reports to the Financial Reporting Centre.
“The main objective of the investigations was to examine the operations of the NYS-related bank accounts and transactions, and in each instance assess the bank’s compliance with the requirements of Kenya’s Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) laws and regulations,” said CBK in their statement.
Of the five banks only Equity Bank, KCB and Diamond Trust Kenya have confirmed receiving official communication from the CBK.
The three banks have assured their clientele that they would respond to the issues brought up by the CBK within the specified 14-day period.
Furthermore, the CBK reiterated that more investigations were being conducted to identify other banks that might have handled the National Youth Service loot.
“CBK has shared the findings with the relevant investigative agencies for their appropriate action. Further, an additional set of banks will also be identified and investigated,” read the statement by CBK.