Companies

Banks tighten controls after Sh392m NYS fines

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A security office at the Central Bank of Kenya office, Nairobi. FILE PHOTO | NMG

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Summary

  • KCB, Co-op Bank, DTB, Stanchart, and Equity are bolstering their fight against financial crimes.

Five banks that were fined Sh392.5 million for handling billions of shillings stolen from the National Youth Service (NYS) have moved to tighten their controls to reduce the risk of such incidences recurring.

KCB #ticker:KCB, Co-op Bank #ticker:COOP, DTB #ticker:DTK, Standard Chartered Bank (Kenya) #ticker:SCBK and Equity #ticker:EQTY, which transacted Sh3.57 billion, have disclosed in their annual reports steps taken to bolster their fight against financial crimes.

StanChart, for instance, says the NYS issue underscored the need to continuously improve its systems and tighten controls on transactions.

“As an outcome, we swiftly enhanced our controls around cash and payments from government and other government related bodies,” said StanChart that was fined Sh77.5 million for having handled Sh1.6 billion of the NYS money.

The bank adds that even though it has no appetite for breaches in laws and regulations related to financial crime, such incidents cannot be entirely avoided.

Its parent firm, Standard Chartered PLC said early this year there may be further penalties or other financial consequences for the Kenyan unit in connection with the NYS investigation.

KCB, which was fined Sh149.5 million for handling Sh639 million of the NYS cash, says in its annual report that it continues to strengthen its ability to safeguard customers and itself against financial crime.

“We have taken measures to reacquaint our staff on all the regulations and processes to be followed in the event of suspicious transactions,” says CEO Joshua Oigara.

Money laundering

The bank discloses that last year, the Central Bank of Kenya undertook a targeted inspection to assess KCB’s compliance with anti-money laundering and countering the financing of terrorism laws and regulations.

It then gave the regulator a detailed response on issues that had been flagged.

Last year, KCB staff spent at least 7.1 days on mandatory online courses, part of which involved anti-money laundering polices.

Equity discloses that review of compliance with the laws formed part of its board meetings.

The bank, which was fined Sh89.5 million for transacting Sh886 million NYS cash, also held training programmes for its directors with a focus on financial crimes.

DTB and Co-op Bank, which were fined Sh56 million and Sh20 million for handling Sh162 million and Sh263 million respectively, also say they increased their investment in controls including by training staff.