Chief executives and employees of banks who helped ship out billions of shillings from the National Youth Service (NYS) will be arrested and prosecuted, the Director of Public Prosecutions (DPP) Noordin Haji has said.
The announcement comes a day after the Central Bank of Kenya (CBK) fined five commercial banks a total of Sh392.5 million in connection with the theft of funds at the NYS.
“Those implicated will be prosecuted,” Mr Noordin said
The law requires all financial institutions including banks, insurance companies and Saccos to file with the Financial Reporting Centre (FRC) daily reports on transactions above Sh1 million and those deemed suspect.
Bank executives and persons who are convicted for handling illicit cash face a Sh1 million fine and a three-year jail term, while institutions including banks, credit unions facilitating such deals could be fined up to Sh20 million upon conviction. Banks could also lose their licences.
CBK earlier Wednesday said the findings of its investigations had been passed onto investigators to assess whether they would bring any charges.
Those penalised are KCB Group (Sh149.5 million), Equity Bank (Sh89.5 million), Standard Chartered Bank-Kenya (ShSh77.5 million), Diamond Trust Bank (Sh56 million) and Co-operative Bank of Kenya (Sh20 million).
“The second phase of the investigations will involve use of these findings by other investigators, inter alia, assessment of criminal culpability by the Directorate of Criminal Investigations (DCI) and the Office of the Director of Public Prosecutions (ODPP),” CBK said in its statement. The CBK also said more banks would be investigated.
On Thursday, several commercial banks heads and boards were understood to have convened crisis meetings to assess their compliance levels with anti-money laundering guidelines as panic spread after the CBK announcement.
Kenya has 42 banks including those under liquidation and receivership. This came as more questions emerged on the criteria CBK used to penalise the five banks.
Spotlight also shifted on several other lenders which were used to make fraudulent payments in the first mega-scandal at the youth agency.
President Uhuru Kenyatta had earlier ordered unprecedented tough new sanctions against individuals and institutions who flout anti-money laundering laws.
The penalties included loss of licence for banks found culpable. In his address to the nation from State House Nairobi in October 2015, where he outlined the measures to reinvigorate the war on corruption, President Kenyatta said:
“I have met with the Governor of the Central Bank of Kenya and with the Head of the Financial Reporting Centre to discuss and agree with them how we can ensure the banking system is not used to launder the proceeds of theft and fraud. From today those banks that break our anti-money laundering laws and regulations will, at a minimum, lose their banking licences.”
The decision by CBK to penalise the lenders was on Thursday welcomed by experts who had long held that while there are laws and regulations which require banks to conduct checks to detect the proceeds of graft, many lenders are flouting them with no consequences.
“These were meaningful fines by the Central Bank,” said Nairobi based financial analyst Aly Khan Satchu.
Mr Kunal Ajmera, chief operating officer at consultancy firm Grant Thornton, said the sanctions would rein in rogue bankers.
“I think the action taken by CBK is unprecedented and shows the seriousness of the central bank to tackle graft in Kenya,” Mr Kunal in an interview said.
Mr Robert Shaw, also an analyst, said: “It shows the CBK is now playing a stronger and welcome role in regulating banks. For a long time it was perceived to have underperformed in this core responsibility area.”
World Bank pushes G-20 to extend debt relief to 2021
World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.
“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.
He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.
The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.
People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.
For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.
Debt burdens, already unsustainable for many countries, are rising to crisis levels.
“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.
Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans
The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.
“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.
Tighter Reins on Platforms for Mobile Loans
The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.
Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.
Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.
Scope Markets Kenya customers to have instant access to global financial markets
NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options.
This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.
The Scope Markets app offers clients over 500 investment opportunities across global financial markets.
The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.
The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).
The platform also offers an enhanced client interface including catering for those who trade at night.
The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour; Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).
The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.
Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”
He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.