×
× Digital News Videos Opinion Special Reports Lifestyle Central Coast Eastern Nairobi North Eastern Nyanza Rift Valley Western Business News Stocks Financial Standard Africa Asia America Europe Weird News Editorial Commentary Letters Crazy World Features Entertainment Money & Careers Health & Science Sci & Tech Home & Away Generation Next Cartoon Education Pointblank Environment Travel & Destination Columns Kipkoech Tanui uReport Kiambu Murang'a Nyandarua Kirinyaga Nyeri Baringo Bomet Elgeyo Kajiado Kericho Laikipia Nakuru Nandi Narok Samburu Trans Nzoia Turkana Mombasa Kwale Kilifi Tanariver Taita Taveta Kakamega Vihiga Bungoma Busia Siaya Kisumu Homabay Migori Kisii Nyamira Nairobi Uasin Gishu West Pokot Sunday Magazine The Hague Trial Kenya @ 50 Education and Training Health and Environment Insurance and Financial Security Housing Current Affairs Humour Makau Mutua David Oginde Clay Muganda Comand Your Morning Mohamed Wehliye Wednesday Life Alexander Chagema Arts & Culture Kamotho Waiganjo Barrack Muluka Xn Iraki Urban Rights - By Steve Ouma Branding Voice KCB Fredrick Ogola Sunday Magazine Wanja Kavengi Njoki Kaigai David Oginde Ken Opalo Daisy Maritim Houghton Irungu Hustle News Group Stages Round of 16 Quarter Finals Semi Finals Finals Third Place play-offs Opinion Dr Pesa Podcasts Round Table Sepetuko Eve Woman Ramadhan Special Fact Check Correction Explainers The Standard Insider Blog E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Five banks caught up in NYS scam to pay Sh393m fine

By Otiato Guguyu | September 13th 2018 at 12:00:00 GMT +0300

Central Bank of Kenya Governor Dr. Patrick Njoroge addressing the press on the economic situation in the country, at the CBK Headquarters. ON 18/09/2017. [Photo:Jenipher Wachie/Standard]

Five banks used by National Youth Service suspects to siphon Sh9 billion from State coffers have been fined Sh392.5 million.

The Central Bank of Kenya (CBK) has also given the banks - Kenya Commercial (KCB), Equity, Standard Chartered (StanChart), Cooperative and Diamond Trust (DTB) - two weeks to seal the loopholes that facilitated one of the country’s biggest frauds.

Damning allegations

The regulator ordered the banks to submit an action plan to thwart such lapses.

“Each has expressed their strong commitment to being fully compliant on all aspects of the law, and addressing the identified lapses through time-bound action plans,” CBK Governor Patrick Njoroge said in a notice.

However, Equity Bank, KCB, DTB and StanChart, responding to the damning allegations last evening, claimed they had yet to be penalised and had only received summons to explain the NYS-related transactions within two weeks.

KCB has been slapped with the highest penalty for channelling money stolen from the Government through the NYS scam.

It will be required to pay Sh149.5 million for processing amounts of up to Sh639 million. This is despite the fact that the bank processed lower amounts than its peers.

Standard Chartered processed Sh1.62 billion but was fined Sh77.5 million, while Equity Bank processed Sh886 million and was fined Sh89.5 million.

Large sums

Co-operative Bank was also found culpable for helping divert Sh263 million and will have to pay Sh20 million. Diamond Trust Bank will pay Sh56 million for transferring Sh162.5 million to NYS suspects’ accounts.

The fines were based on the lenders’ failure to report large transactions that would have raised a red flag to relevant investigating authorities. The banks also seemed to have done little or no due diligence on the customers they handed cash to and sometimes handed over large sums of money without appropriate documentation.

It was reported that some of the companies under investigation opened accounts a few hours before the NYS money was credited, which meant that insiders were aiding the suspects in the fraud.

The banks, which have a duty to report large transactions, contravened their mandate by not reporting transactions that exceeded Sh1 million to the Financial Reporting Centre.

The investigations started in May after concerns were raised over the second round of plunder at NYS, which was estimated at Sh9 billion. The CBK governor said the investigation would now be handed to the Directorate of Criminal Investigations and the Office of the Director of Public Prosecutions to pursue criminal culpability.

If an individual is found guilty of contravening the Crime and Anti-Money Laundering Act, they can be imprisoned for a term not exceeding 14 years or be fined Sh5 million.

 


Read More

Feedback