Zachary Ochuodho @zachuodho
The Central Bank of Kenya (CBK) has fined five banks Sh392.5 million for processing the illegal National Youth Service (NYS) cash which led to a Sh1.9 billion loss and attempted theft of another Sh695 million.
The banks include Standard Chartered Bank Kenya Ltd which has been fined a total of Sh77.5 million, Equity Bank Kenya Ltd required fined Sh89.5 million, KCB Bank Kenya Ltd fined Sh149.5 million, Co-operative Bank of Kenya Ltd asked to Sh20.0 million and Diamond Trust Bank Kenya Ltd fined Sh56 million.
According to CBK, the initial investigation examined the operations of the NYS-related bank accounts and transactions and in each instance assessed the bank’s compliance with the requirements of Kenya’s Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) laws and regulations.
“Violations were identiﬁed, principally related to the failure to report large cash transactions, failure to undertake adequate customer due diligence, lack of supporting documentation for large transactions and lapses in the reporting of Suspicious Transaction Reports (STRs) to the Financial Reporting Centre (FRC),” the CBK statement said.
CBK said it assessed the monetary penalties for each of the ﬁve banks in accordance with the extent of the violations that were identiﬁed and pursuant to CBK’s powers under the Banking Act and the Central Bank of Kenya Act.
CBK discussed the detailed ﬁndings with banks top directors and management and they have expressed their strong commitment to fully comply on all aspects of the law and addressing the lapses through time-bound action plans.
“These actions will be submitted to the CBK within fourteen (14) days and CBK will closely monitor their implementation. More generally, CBK will work with all other banks to ensure that these ﬁndings are also applied to strengthen all AML/CFT frameworks,” said the regulator in a statement.
Meanwhile, in a response Equity Bank, KCB, Standard Chartered Bank and DTB chief executive officers – James Mwangi, Joshua Oigara, Lamin Manjang’ and Nasim Devji responded, saying they will co-operate with the regulator on this matter as part of their bank’s strict compliance with regulations and best practice.
Mwangi said the bank is currently reviewing the report with a view to providing a detailed response to the issues raised by CBK within the stipulated period.
“We wish to reassure our stakeholders that Equity Bank is a regulated entity that respects andcomplies with all laws and applicable regulatory guidelines. We also wish to confirm that the bank respects and adheres to the rules and regulations of all the countries in which we operate,” he said in a statement.
Oigara said: “We are reviewing the CBK report and we will respond to the issues raised conclusively within 14 days. KCB Bank remains committed to the respective banking laws across our markets of operation and international best practice”.
Manjang’ said Standard Bank Kenya together with Standard Chartered Group, takes its responsibility to combat financial crime very seriously and remains committed with applicable laws and regulatory requirements.