Central Bank Governor Patrick Njoroge wants the Family Bank and its senior officials prosecuted for failing to report significant transactions by National Youth Service (NYS) money theft suspects to send a strong message to the banking industry.
More than Sh1.6 billion of NYS was stolen in transactions that involved millions of shillings at once. Banking regulations require that anyone withdrawing or depositing more than a Sh1 million (or $10,000) should fill a special form stating where the money is from or where it is going, who they are paying or receiving the money from and the purpose.
Explaining the purpose of this regulation, the Central Bank of Kenya (CBK) says, “While most cash transactions are carried out in legitimate business, large cash transactions which are characterized by informality and anonymity make bank transactions vulnerable to money laundering and terrorism financing.”
In some cases, more than Sh80 million of the NYS would be withdrawn in only two days.
The Governor has written to the Directorate of Criminal Investigations (DCI) boss Ndegwa Muhoro and Director of Public Prosecutions Keriako Tobiko stating that the prosecution of Family Bank officials implicated in the scam would send a strong message to banking sector players and would have a positive impact on the banking industry.
The DCI has also written to Director of Public Prosecutions Keriako Tobiko recommending the bank and its staff be charged but Mr. Tobiko had asked the investigators to seek expert opinion on whether by charging the bank there would be a crisis in the sector.
Mr. Tobiko had also directed investigators to dig in on the general financial status and stability of Family Bank.
Parliament has already opened investigations into the scandal with televised interviews of the key suspects.
President Uhuru Kenyatta has said he has emptied 7,ooo cells for those found guilty of stealing public funds. The cells are so far still empty though thefts of public money continue to feature prominently in the media. The latest involves the ministry of Health where Shs5 billion has yet to be accounted for.