Central Bank Governor Patrick Njoroge yesterday told banks that transacted the NYS loot to carry their own cross, terming the theft of national resources unconscionable.
Speaking to journalists in Nairobi, Njoroge said the bank has elaborate regulations to help banks flag and report suspicious transactions and that those involved will be finally arrested.
“The issue is not regulations or lack thereof, the guidelines are there; the issue is not enforcement or lack of understanding of the regulations either. It is deliberately not following guidelines,” Njoroge said.
Njoroge spoke as it emerged that CBK investigators had visited three commercial banks in relation to the NYS transactions.
“How is it possible that someone could come through and move more than Sh100 million in cash, like cases we have heard about NYS, without any bank flagging out that?” Njoroge asked.
He explained that the first guidance notice on money laundering was issued in early 2016 to reduce the risk inherent in cash transactions such as losses due to fraud and theft.
In the notice, the regulator advised banks to consider use of alternative electronic payments that are secure. It also capped the amount to be transacted over the counter at Sh1 million, with clear guidelines on how to transact such amounts.
Under the regulations, a customer is required to fill a mandatory cash withdrawal form stating where the money is being taken and the use.
Among the questions that must be answered include: why the large cash deposit or withdrawal is necessary, why it cannot be done through electronic means, the source of the funds as well as the full identity of the intended beneficiaries.
They are also expected to an annual report on measures taken to curb the vice, as well as report suspicious transactions immediately to the Financial Reporting Centre.
In March this year, the regulator issued a guidance notice on money laundering and terrorism financing.
It was the first time the regulator was speaking publicly about the NYS scandal in which an estimated Sh468 million is said to have been looted. He fell short, however, of naming some of the banks involved in the saga, saying the matter was still under investigation.
In 2016, the CBK said it had slapped three commercial banks with a fine of Sh3 million for failing to report suspicious transactions relating to the Sh791 million NYS scandal.
The three were Family Bank, Faulu Micro-Finance and Sidian Bank. CBK also forced Family Bank, through which the bulk of the money was transacted, to sack nine managers.
Yesterday, the governor said CBK is deeply embedded in the investigations to ensure the funds are traced and recovered, and those involved are prosecuted.
"As you know these investigations are in high gear, I just want to let you know that the CBK is working closely with DCI and other agencies on this," he said.
"We are conducting a multi-agency investigation on this matter. The first phase involves those who transacted. This is to ensure money stolen is recovered. The following phase will go for banks that allowed those transactions,’’ Njoroge said.
But his reserved comments elicited a backlash on Twitter with a hashtag #MoneyLaunderingBanks, and CBK Governor trending.
"What an underwhelming presser on #MoneyLaunderingBanks and once again the CBK Governor fails to mention the banks nor the CEOs he's admitting broke the law by facilitating NYS transfers. Why keep protecting these people?" asked @KinyanBoy
"If he was ever serious with his work, he would not hoodwink the public with 'investigations' on how banks engaged in money laundering,’’ charged the Consumer Federation of Kenya (Cofek)