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 re-invigorate 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.”

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