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February 17, 2019

CBK penalises five banks Sh392m over flawed NYS payments

"CBK says the banks will be penalised Sh392.5 million against a transaction value of Sh3.578 billion."
"CBK says the banks will be penalised Sh392.5 million against a transaction value of Sh3.578 billion."

The Central Bank of Kenya will collect Sh392 million in penalties from five banks that violated anti-money laundering regulations in NYS transactions amounting to Sh3.5 billion.

In a statement on Wednesday, CBK said the banks failed to comply with the requirements of Kenya's Anti-Money Laundering/Combating Financing Terrorism laws and regulations.

They are Standard Chartered, Equity Bank, KCB, Co-operative Bank, and Diamond Trust Bank Kenya Ltd.

CBK says the banks will be penalised Sh392.5 million against a transaction value of Sh3.578 billion.

While Standard Chartered Bank transacted Sh1.628 billion on its account, it was penalised Sh77.5 million.

Equity Bank is said to have transacted Sh886 million and will pay Sh89.5 million in fines.

KCB transacted Sh639 million and will pay Sh149.5 million in penalties.

Co-operative Bank transacted Sh263 million and will pay Sh20.0 million while Diamond Trust Bank transacted Sh162 million and will pay Sh56.0 million.

"The investigations prioritised banks that handled the largest flows," CBK said.

"The main objective of the investigations was to examine the operations of the NYS-related bank accounts and transactions."

Also read: CBK probes 6 banks over NYS payments

The violations included failure to report large cash transactions, failure to undertake adequate customer due diligence, and lack of supporting documentation for large transactions.

The bankers' regulator also flagged lapses in the reporting of Suspicious Transaction Reports (STRs) to the Financial Reporting Centre (FRC).

CBK says it has discussed the detailed findings with the boards of directors and senior management of each of the banks.

"Each has expressed their strong commitment to being fully compliant on all aspects of the law, and addressing the identified lapses through time-bound Action Plans."

"These Actions Plans will be submitted to the CBK within fourteen (14) days and CBK will closely monitor their implementation," reads part of the statement.

It said the second phase of the investigations will involve the use of these findings by other investigators.

This will include an assessment of criminal culpability by the Directorate of Criminal Investigations (DCI) and the Office of the Director of Public Prosecution (ODPP).

"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," it said.

"The actions taken by CBK, and subsequently by other agencies, are aimed at safeguarding stakeholders’ interests and maintaining a healthy financial sector."

"CBK will continue to ensure that the banking sector’s legal and regulatory framework, including for AML/CFT, is aligned to best practices," CBK said.

The regulator pledged to continue enforcing strict adherence to the applicable laws and regulations, "as the interests of the public, investors, and other stakeholders will be protected only in an environment that is governed by the rule of law."

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