Kenya’s chief prosecutor has fined five banks a total of 385 million shillings ($3.75 million) for not reporting suspicious transactions under anti-money laundering laws, adding his office reserved the right to prosecute them in the future. Some of the banks fined are among the biggest in Kenya, including KCB Group and Equity. Others that were hit with penalties were Co-op Bank Kenya, StanChart Kenya and Diamond Trust. The charges related to the theft of nearly $100 million from the National Youth Service (NYS). Dozens of senior government officials and business people were charged in May 2018 with various crimes.
The announcement was a second time the banks had faced fines. In 2018, the central bank fined the five banks nearly $4 million for failing to report suspicious transactions. Chief Prosecutor Noordin Haji told reporters that further investigations found the lenders had failed to put in place adequate systems to combat money laundering and failed to know their customers as the law required.
He was deferring prosecuting the banks, he said, to see if they met a deadline to improve their practices. “Prosecution is not necessarily the only solution to the problems we are faced with, especially when it comes to the issue of graft and money laundering,” he said.
“The banks had failed to report suspicious transactions. They were not part and parcel of the corruption crime or the graft crime itself.” The chief executives of the five lenders, who flanked Haji as he addressed the news conference, did not comment at the press conference. Standard Chartered Kenya said in a statement it had agreed a settlement with Haji of 100 million shillings and that the chief prosecutor had agreed to defer prosecution against the bank.
The fines will have a minimal impact on the performance of the banks, said Patrick Mumu, an analyst at Genghis Capital. “The bigger impact will be at the operational level and how stringent banks will be on movement of money and depositors, but not on their lending activities,” he said.
