Kenya banks face stiff sanctions if found aiding graft
Thursday September 27 2018
Central Bank of Kenya governor Patrick Njoroge. FILE PHOTO | NMG
Kenya's banking regulator has issued a warning to lenders found to be handling graft proceeds.
The Central Bank of Kenya (CBK) Governor Patrick Njoroge said Thursday that the banks will face stiff sanctions.
He was addressing bankers at the 7th Annual Research Conference organised by the Kenya Bankers Association (KBA) in Nairobi.
Dr Njoroge said CBK is ready to crack the whip again on any rogue bank which helps ship out money from public institutions illegally obtained from graft.
“Two weeks ago we took action against some of your institutions because of non-compliance with integrity laws. Make no mistake,” warned Dr Njoroge.
“We will not hesitate to do it again under similar circumstances. Banks must steer away from being used as conduits for ill-gotten funds,” he added.
He said bank chiefs owe a duty of care to the public not to abet or aid graft in public institutions.
“The Kenyan people demand that, from all of us, and will take us very unkindly if we look the other way,” Dr Njoroge said.
Penalised
Nearly a fortnight ago, the CBK fined five banks $3.1 million for their role in aiding the movement of the stolen funds.
The penalised banks were KCB Group, the region’s largest bank by assets which was slapped with a $1.49 million fine, Equity Bank $895,000, Standard Chartered Bank-Kenya $775,000, Diamond Trust Bank $560,000 and Co-operative Bank of Kenya $200,000.
The office of the Director of Public Prosecutions said it was also preparing charges against bank executives for their alleged role in helping ship out more than $30 million of money stolen from Kenya's National Youth Service (NYS) two years ago.
The law requires all financial institutions to file daily reports with the Financial Reporting Centre on transactions above $10,000 and those deemed suspect. CBK accused the five banks of failing to comply with the requirements of Kenya’s Anti-Money Laundering/Combating Financing of Terrorism laws and regulations.
An individual found guilty of contravening the Crime and Anti-Money Laundering Act faces a prison term not exceeding 14 years or a fine of Ksh5 million ($50,000).
-Reporting by Brian Ngugi and The EastAfrican Reporter