Kenya Central Bank Fines Lenders $3.9 Million for Youth Fund

NAIROBI (Capital Markets in Africa) – Kenya’s central bank fined five of the country’s biggest lenders a total 392.5 million shillings ($3.9 million) after a probe showed they handled money acquired illegally from the National Youth Service.

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. handled 3.58 billion shillings, the regulator said in an emailed statement.

Violations include failure to report large cash transactions and to undertake adequate customer due diligence, lack of supporting documentation for large transactions and lapses in the reporting of suspicious transactions to the Financial Reporting Centre, the central bank said.

The regulator “shared the findings with the relevant investigative agencies for their appropriate action,” it said. “An additional set of banks will also be identified and investigated.”

The central bank fined KCB 149.5 million shillings, the highest amount. Equity has been asked to pay 89.5 million shillings, Standard Chartered 77.5 million shillings, DTB 56 million shillings and Co-operative 20 million shillings. The Kenya Bankers Association lobby group said it would respond on the matter on behalf of the industry.

KCB and Standard Chartered said confirmed they has received formal notification from the central bank and were co-operating with the regulator.

Graft Purge
The former NYS Director-General Richard Ndubai and the former Public Service Principal Secretary Lillian Omollo are among 40 government administrators prosecuted over illegal payments amounting to at least 8 billion shillings from the state-run organization that trains young people on basic paramilitary and technical skills.

Kenya’s state prosecutor had ordered the arrests of the nation’s deputy chief justice, the heads of the railway utility and land commission and a former governor of the capital, Nairobi, on corruption-related charges. He’s also prosecuted the chief executive officer and key officials at the state-run power utility and the principal secretary of the Agriculture Ministry for alleged graft.

President Uhuru Kenyatta, whose second and final term is due to end in 2022, may be looking to earn a legacy as the leader who finally helped contain graft in East Africa’s biggest economy.

Source: Bloomberg Business News