Kenya’s Prosecution Fines Five Banks KSh385 million in Deferred Prosecution

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Central Bank of Kenya building

Kenya’s Office of the Director of Public Prosecutions (ODPP) on Thursday entered a deferred prosecution agreement (DPA) with five banks for transacting Ksh 392.5 million illegally with the National Youth Service (NYS).

The banks fined include KCB Group and Equity, Co-op Bank Kenya, StanChart Kenya, and Diamond Trust.

“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,” Chief Prosecutor Noordin Haji told the media.

“The banks had failed to report suspicious transactions. They were not part and parcel of the corruption crime or the graft crime itself.”

According to the ODPP, the banks committed to review and implement a number of corrective measures aimed at enhancing monitoring on an ongoing basis, of all complex, unusual, suspicious and large transactions undertaken by their customers.

“The move between the ODPP and the banks is aimed at fighting financial crimes and the resolve to remain committed to ensuring that financial institutions strive to attain the highest principles of integrity and professionalism.”

In 2018, the accused financial institutions were fined by the Central Bank of Kenya for being in violation of failure to report large cash transactions, lack of supporting documentation for large transactions, and lapses in the reporting of Suspicious Transaction Reports (STRs) to the Financial Reporting Centre (FRC).

In 2019 the Director of Public Prosecutions formed a team to review files after DCI recommended charges against the five and officials who benefitted from KSh8 billion in NYS II scandal. The said banks:

Standard Charted Bank received Ksh 1,628,902,000 between January 2016 and April 2018 out of which Ksh 588,588,000 was suspiciouslyJanuarycted by bank officials and no report made.

Kenya Commercial Bank received Ksh 800 million out of which 148, 397,00 was transacted by bank officials.

Equity Bank received Ksh 886,426,904 out of which Ksh 264, 200,000 and USD 58,000 was suspiciously transacted in violation of the law.

Diamond Trust Bank received Ksh 164 million and Ksh 27,946,298 was suspiciously transacted

Cooperative Bank of Kenya received Ksh 250 million and investigations revealed that Ksh 25 million was suspiciously transacted.

 

CBK Fines 5 Kenya Banks for Transacting Illegally With National Youth Service

The Deferred Prosecution Agreement in Kenya is anchored in law and entered pursuant to Article 157 and 159 of the Constitution. It allows a corporate entity that has committed an offence to enter into an agreement with the ODPP to defer prosecution of the entity for a set period on condition that the entity meets certain conditions set out in the agreement. 

Failure to meet the said conditions will lead to automatic prosecutions.

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