NAIROBI, Kenya, Sep 13 – Four of the five banks that have been implicated by the Central Bank of Kenya for violating financial regulations in the National Youth Service scandal have said they are cooperating with investigators to establish the level of culpability.
The Banks which include Standard Chartered Bank, Equity Group, KCB Group, Co-operative Bank of Kenya Ltd, and Diamond Trust Bank Kenya have been fined a total of Sh392 million for improperly handling NYS transactions.
KCB Group Chief Executive Joshua Oigara has said the bank is reviewing the CBK report and will respond to the issues raised conclusively with 14 days.
Oigara says the bank has received notification from the CBK in relation to compliance with the requirements of Anti-Money Laundering Act, “the notification indicates a penalty and direction for corrective measures.”
KCB Group was penalized the highest at Sh149.5 million followed by Equity Bank at Sh89.5 million while Standard Chartered Bank was penalized Sh77.5 million.
Equity Group and DTB, however, insist that no penalty has been imposed at this stage while Co-operative bank which has been fined Sh50 million has not responded to the CBK allegations.
Standard Chartered Bank Chief Executive Lamin Manjang’ says the bank has received notification of a Sh77.5 million penalty from the CBK admitting it is working with the regulator to resolve the areas of concern.
“We have already invested significantly in strengthening our controls and we recognise we still have more to do. As such, we will continue to review and take necessary measures to bolster our overall defences against potential financial crime risks,” says Manjang’.
The violations include 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 to the Financial Reporting Centre.
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.
“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),” the regulator notes.