Central Bank of Kenya fines 5 banks for "failing to undertake adequate customer due diligence" leading to loss of public funds

Author: Adonijah Ochieng, Business Daily (Kenya), Published on: 13 September 2018

"CBK fines five banks for handling NYS funds"

Central Bank of Kenya on Wednesday fined five commercial banks that were used to handle billions of shillings from the National Youth Service (NYS).The five banks include Standard Chartered Bank, Equity, KCB , Co-operative Bank and Diamond Trust Bank Kenya for handling National Youth Service funds. KCB has been fined Sh149.5 million, Standard Chartered Bank (Sh77.5 million), Equity Bank (Sh89.5 million), Cooperative Bank (Sh20 million), and DTB (Sh56 million). 

Wednesday's action followed months of investigations into the conduct of the banks that enabled movement of funds which lead to loss of billions at NYS. "CBK announces the conclusion of the first phase of the investigation of the banks that were used by these persons in transacting the NYS funds. The investigations prioritised banks that handled the largest flows, namely; Standard Chartered Bank Kenya Ltd, Equity Bank Kenya Ltd, KCB Bank Kenya Ltd, Co-operative Bank of Kenya Ltd, and Diamond Trust Bank Kenya Ltd," CBK said in a statement. The five banks, according to CBK, were found to be in violation of the law for failing to report large cash transactions and failing to undertake adequate customer due diligence. The banks also lacked supporting documentation for large transactions. CBK said the second face of the investigation will involve determining the criminal culpability of the institutions and people involved.

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Related companies: Co-operative Bank of Kenya Diamond Trust Bank Kenya Equity Bank Kenya Commercial Bank Standard Chartered