The Central Bank of Kenya (CBK) on Wednesday, February 21, unveiled the draft Banking Penalties Regulations 2024 which proposes hefty fines for financial institutions for various offences.
In the proposals, banks will face penalties for various offences, including opening, relocating, and closing banks and branches without approval from the CBK. According to the Regulations, banks will be fined Ksh2 million if found guilty of this offence.
On the other hand, banks will be required to display audited financial statements in public at their respective branches.
"An institution or person who does not exhibit last audited financial statements in a conspicuous place in every office and branch in Kenya in accordance with the minimum financial disclosure requirements prescribed by the Bank under section 22(1)(a) of the Act commits a violation.
"And is liable, upon assessment, in the case of an institution, to a penalty not exceeding Ksh5 million shillings and where the violation is committed by a natural person, a penalty not exceeding Ksh1 million," read the regulations in part.
Failure to keep records will also attract a penalty which is proposed to be set at Ksh20 million.
Other Penalties
As detailed in the proposed regulations, the employment of senior directors of the banks without CBK's approval will also be penalised heavily.
"An institution or person who appoints or elects a person as a director or senior officer without certification by the Bank that the person is a fit and proper person to manage or control the institution under section 9A (1) of the Act commits a violation and is liable upon assessment, in the case of an institution to a penalty not exceeding Ksh5 million and where the violation is committed by a natural person, a penalty not exceeding Ksh1 million.
Institutions and individuals who become significant shareholders of a bank without certification from the CBK face fines of Ksh1 million for individuals and Ksh5 million for institutions.
Additionally, non-compliance during inspections will attract a penalty of Ksh20 million.
In the plan, CBK will inform banks of their infringements and fines by writing with the banks given a window to respond before the penalty is imposed.
"Any institution or person who is dissatisfied by a decision of the Bank under these Regulations may submit a written request to the Bank for review. The request made under in sub-paragraph (1) under shall be made within fourteen days from the date of receipt of the decision," CBK proposed.
Meanwhile, CBK has called on Kenyans to submit their comments on the proposed regulations by Monday, March 18.
