Five banks fined Ksh 385M for involvement in NYS-2 saga

The Office of the Director of Public Prosecutions has fined 5 commercial banks a total of Ksh 385 million for their role in the National Youth Service 2 saga (NYS-2 saga).

KCB, Equity, Co-op Bank, Diamond Trust Bank and Standard Chartered Bank Kenya were all found capable of violating various provisions under the Proceeds of Crime and Money Laundry Act.

The five will pay the amount as penalties for their respective violation of the various provisions of the Proceeds of Crime and Antimoney Laundering Act after they entered a Deferred Prosecution Agreement.

Once the money is paid into the prosecution fund account, it will be restituted to the public following existing laws.

The second National Youth Service money heist is estimated to have cost the taxpayer Ksh 8 billion due to dubious transactions with some commercial banks accused of handling part of the dirty proceeds.

Early last year the ODPP called for investigations to be carried out on the five banks for allegedly violating laws that govern banks in matters anti-money laundering and crime proceeds.

Subsequently, the DCI conducted investigations and made recommendations that charges be preferred against the commercial banks and their officials for violation of various provisions of the Proceeds of Crime and Money Laundry Act during the NYS2 saga.

According to the investigations, the banks failed to maintain effective programmes against money laundering and also conduct sufficient due diligence of their account holders.

Having learnt of the DCI investigations each of the five banks entered into a deferred prosecution agreement with the DPP.

In addition to the penalties, the banks committed to reviewing a number of corrective measures that among others include enhancing their anti-money laundering systems and punishing officers involved in the NYS 2 saga.

They should then forward the report of the said staff to ODPP for further action.

The five banks reportedly handled a total of Ksh 3.5billion from NYS with StanChart handling the largest transaction worth Ksh 1.6billion, Equity Bank handled Ksh 886 million and KCB  processed  Ksh 639 million of the payments.


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