Central Bank of Kenya on Wednesday fined five commercial banks that were used to handle billions of shillings from the National Youth Service (NYS).
The five banks include Standard Chartered Bank , Equity, KCB, Co-operative Bank and Diamond Trust Bank Kenya for handling National Youth Service funds.
MONTHS OF PROBE
KCB has been fined Sh149.5 million, Standard Chartered Bank (Sh77.5 million), Equity Bank (Sh89.5 million), Cooperative Bank (Sh20 million), and DTB (Sh56 million).
Wednesday's action followed months of investigations into the conduct of the banks that enabled movement of funds which lead to loss of billions at NYS.
"CBK announces the conclusion of the first phase of the investigation of the banks that were used by these persons in transacting the NYS funds. The investigations prioritised banks that handled the largest flows, namely; 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," CBK said in a statement.
The five banks, according to CBK, were found to be in violation of the law for failing to report large cash transactions and failing to undertake adequate customer due diligence. The banks also lacked supporting documentation for large transactions.
CBK said the second face of the investigation will involve determining the criminal culpability of the institutions and people involved.
"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," CBK said.
Investigation in the Sh9 billion fraud claims at the youth agency showed that multiple payments running into tens of millions of shillings were authorised from the Integrated Financial Management Information System (IFMIS) to the involved companies’ accounts at intervals, releasing the whole amount in less than an hour after it was asked for.