Five Kenyan Banks Slapped with Sh394 Million Fine for Transacting Stolen NYS Money

Five Kenyan banks have been handed hefty fines after they were found guilty of irregularly transacting millions of shilling in the second phase of the National Youth Service (NYS) scam.

A probe by the Central Bank of Kenya (CBK) established that the five lenders were used to move illegally acquired funds by NYS looters.

The five banks which include Kenya Commercial Bank (KCB), Equity Bank, Standard Chartered Bank, Diamond Trust and Cooperative Bank of Kenya (CBK) were slapped with a combined fine of Sh394 million.

KCB will pay the highest fine of Sh149.5 million, followed by Equity Bank (Sh89.5 million) while Standard Chartered Bank will pay a monetary penalty of Sh77.5 million.

Diamond Trust Bank and Co-operative Bank of Kenya will part ways with Sh56 million and Sh20 million respectively.

CBK said more than 3.6 billion was wired through the five banking institutions with the highest flow (Sh1.6 billion) having been transacted via Standard Chartered Bank.

Equity bank and KCB handled Sh886 million and Sh639 million of the loot respectively while Diamond Trust Bank facilitated Sh162 million.

“CBK has discussed the detailed findings with Boards of Directors and Senior Management of each of the banks. Each has expressed their strong commitment to be fully compliant on all aspects of the law, and addressing the identified lapses through time-bound Action Plans,” reads the statement from CBK.

“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.

The Central Bank said more banks that handled the stolen funds from the NYS scandal will be identified as further investigations continue.

“The second phase of the investigations will involve use of these findings by other investigators, inter alia, assessment of criminal culpability by the Directorate of Criminal Investigations (DCI) and the Office of the Director of Public Prosecution (ODPP).

“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,” reads the statement by CBK.