Five banks have entered into a plea bargain with Director of Public Prosecutions Noordin Haji to spare their chief executives from facing criminal charges for facilitating the looting of funds from the National Youth Service.
Haji was addressing the media alongside Director of Criminal Investigations George Kinoti on Thursday, March 5, when he revealed that Ksh385 million had been recovered from the lenders.
Cartels had taken advantage of the local banks to launder money looted in the NYS 2 scandal.
The Central Bank of Kenya (CBK) conducted a target inspection on five banks which revealed that apart from administrative lapses in the internal anti-money laundering controls of some of the banks, there was possible criminal culpability for violation of the provisions on the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA).
The investigations were conducted with regard to criminal culpability and forwarded the resultant investigation files relating to the commercial banks.
The DCI on the basis of the investigations made recommendations through the files that charges be preferred against the bank officials for violating several provisions of the POCAMLA.
"Our independent perusal of the files revealed that there was sufficient evidence against the said banks and officials for failure to maintain effective programmes against money laundering,
"Failure to conduct sufficient due diligence on some of their account holders," Haji stated.
The banks on learning of the findings of the investigations, through their representatives, wrote to the DPP requesting to cooperate and resolve the matter in lieu of prosecution.
"We considered the requests in line with the decision to prosecute and the need for the application of alternatives to prosecution and a decision to enter into Deferred Prosecution Agreements (DPAs) was accordingly reached," a statement by the DPP read.
A DPA is struck between the prosecution and a corporate organisation involved in an offence. It allows for the DPP to defer prosecution of a particular corporate entity for a set period of time on condition that the organisation undertakes to, meets or continues to abide by conditions of the agreement.
The DPAs were arrived at upon payment of the Ksh385 million by the banks as a penalty for the violation of the POCAMLA.
The money was paid into the Prosecutions Fund Account and will be restituted to the public inline with the existing laws and procedures.
On top of the penalties, the lenders pledged to review and implement several corrective measures;
i) Review their Know Your Customer (KYC) compliance status and ensure proper supporting documentation for customer transactions.
ii) Enhance their existing Anti-Money Laundering and Combating the Financing of Terrorism monitoring systems to enable real-time monitoring of digital transactions.
iii) Take disciplinary action against their staff involved in violating POCAMLA provisions and report to the ODPP on action taken against the staff.
iv) Conduct extensive Anti-Money Laundering training for all staff and their board of directors.
v) Undertake remedial measures designed to enhance monitoring, on an ongoing basis, of all complex, unusual, suspicious or large transactions undertaken by customers.
vi) Implement the recommendations of the Target Inspection Report by CBK and ensure full compliance with all the regulations by CBK and all relative laws.
vii) Cooperate fully with the ODPP in any and all matters relating to any violations of POCAMLA and other related anti-money laundering laws.
DPP Haji stressed on the need for collaboration between banks and government agencies in the fight against financial crimes.
