Kenyan Officials Probe Suspected Use of Cryptos in Laundering Stolen Government Funds
The Central Bank of Kenya has fined five major commercial banks for handling stolen state money in the corruption scandal which involves the country’s National Youth Service and Ministry of Devolution and Planning. Reports suggest that the CEOs of the affected banks along with their employees could face arrest, fines and jail time.
According to the Central Bank of Kenya (CBK), the banks were “used by persons suspected of transacting illegally with the National Youth Service (NYS).”
News reports say that the Central Bank is looking into allegations that some senior banking officials and employees in the affected banks used cryptocurrencies to launder some of the ill-gotten monies.
Established back in 1964, the NYS is an organization set up by the Kenyan government to train youths in important national matters. In 2015, it became the focus of a corruption scandal involving the country’s Ministry of Devolution and Planning. The scandal led to then-Cabinet Secretary of the Ministry of Devolution and Planning, Anne Waiguru, and the NYS director at the time, Nelson Githinji to step down from their positions.
In the beginning, at least 791 million Kenyan shillings ($7.65 million) were said to have been stolen from the ministry. The Daily Nation reported back in May that that the scandal has widened to include another 10.5 billion Kenyan shillings ($104 million).
According to Reuters, “Dozens of senior government officials and business people were charged in May with various crimes related to the theft of nearly $100 million from the NYS marking a new effort to crack down on widespread corruption.”
The CBK said that the five commercial banks fined last week were the ones that handled the largest flows of funds received from the NYS. These banks are Standard Chartered Bank Kenya, Equity Bank Kenya, Co-operative Bank of Kenya, and Diamond Trust Bank Kenya.
According to the bank, the five banks handled a total of 3.58 billion Kenyan shillings ($35 million) of funds received from the NYS. It added that they have been collectively fined 393 million Kenyan shillings ($3.9 million). Concerning NYS-related bank accounts and transactions, the banks were found to be in violation of some anti-money laundering and combating of terrorist financing (AML/CFT) regulations, the CBK noted.
The day after the central bank fined the five banks, the Director of Public Prosecutors (DPP), Noordin Haji, told the Daily Nation that “Chief executives and employees of banks who helped ship out billions of shillings from the National Youth Service (NYS) will be arrested and prosecuted.” Finally, the news outlet explained that “Bank executives and persons who are convicted of handling illicit cash face a Sh1 million ($10,000) fine and a three-year jail term, while institutions including banks, credit unions facilitating such deals could be fined up to Sh20 million ($198,294) upon conviction.”
