NAIROBI (Xinhua) --
Kenyan banks have been placed at the center of
corruption scandals after the Central Bank of Kenya (CBK) on
Wednesday slapped several institutions with hefty fines for
facilitating movement of looted cash.
The apex bank
imposed fines on five large banks, ranging from 20,000 U.S.
dollars to 1.5 million dollars, depending on the amount of money
The banks aided movement of millions of dollars looted from
the National Youth Service, an institution that helps in the
development of skills of young people.
The east African nation reportedly lost 90 million dollars in
the scandal, in which several people have been charged in court.
According to the apex bank, the five institutions committed
several violations that include failure to report large cash
transactions, failure to undertake adequate customer due
diligence, lack of supporting documentation for large
transactions and lapse in reporting suspicious transactions to
the Financial Reporting Center.
The unprecedented fines, according to analysts, highlight the
role banks in Kenya have played in fueling runaway corruption.
"These fines place the banks at the center of every
corruption in Kenya and must be punished if the country is to
win the war against the menace," Henry Wandera, an economics
lecturer in Nairobi, said Thursday.
Wandera noted that without banks, it would be impossible to
commit mega corruption in Kenya.
"The banks act as the conduit through which the corrupt
fleece money from public institutions into their pockets," said
In the NYS scandal, money was wired from the institutions’
bank accounts into those held by individuals and withdrawn in
foreign currencies immediately it hit suspects’ bank accounts.
"If these banks had reported the transactions, this money
would not have ended up in peoples’ pockets," said Wandera.
Kenya has stepped up the war on corruption in recent months,
arraigning various suspects that include senior government
President Uhuru Kenyatta has backed the renewed war on graft,
noting he wants to leave a corruption-free country.
Other graft scandals in which suspects have been charged in
court happened at Kenya Power and the National Cereals and
Bernard Mwaso, a consultant with Edell IT Solutions, noted
that moving corruption cash has become easier through banks
because of electronic systems.
"Initially, such transfers involved a lot of paperwork and
would take days. Everything has now been computerized, including
approvals, and it just takes a matter of hours before one gets
the money," he said.
Mwaso welcomed the fines imposed on the banks, noting they
were hefty enough to act as a deterrent.
To curb movement of corruption money, Kenya Bankers
Association (KBA) has taken up several measures that include
drafting guidelines to guide huge transactions.
Under the new rykes, any cash transaction on a single day of
between 10,000 dollars and 100,000 dollars will require approval
of branch manager while that between 100,000 dollars and 200,000
dollars will have to be approved by regional branch manager or
more senior manager.
"Customers have to explain sources of their money, supported
with evidence, before deposits are made. For withdrawal, they
will have to explain reason for drawing out the money in cash,"
said KBA Chief Executive Habil Olaka.
Five major Kenyan banks are fined for aiding corruption