NCBA Bank has come under scrutiny after the Director of Public Prosecutions approved criminal charges against its Chief Executive Officer over allegations that suspicious financial transactions linked to a multi-million-shilling fraud case were not reported.
The NCBA CEO is facing the charges alongside the chief executives of KCB Bank and Co-operative Bank.
The allegations relate to the suspected failure to report transactions believed to involve proceeds of crime, contrary to the Proceeds of Crime and Anti-Money Laundering Act.
Under the law, financial institutions are required to monitor transactions and report activities that appear unusual or may be connected to criminal conduct.
The case is linked to the alleged theft of Ksh363 million from First Assurance Investment Company.
Investigators allege that a former nominated MCA, who was also a director of the company, forged the signature of another director on several cheques and used them to transfer company funds over a period of about six years.
According to prosecutors, the money was moved through accounts held at NCBA, KCB and Co-operative Bank.
The DPP has approved 120 charges against the former MCA, including 114 counts of allegedly making documents without authority.
The allegations have also raised questions about how the funds were transferred through the banking system over several years without attracting sufficient attention or being reported to the relevant authorities.
For NCBA, the case is likely to place its internal compliance and transaction monitoring systems under greater scrutiny.
Banks are required to maintain measures that can identify unusual transactions and ensure that suspicious activity is reported in line with the law.
The charges against the NCBA CEO do not allege that he personally stole the money. Instead, they concern the alleged failure to ensure that suspicious transactions were reported as required.
Prosecutors will have to present evidence to support the allegations as the case progresses through the courts.
The accused persons will also have an opportunity to respond to the charges and defend themselves.
The case highlights the role banks play in Kenya’s efforts to prevent money laundering and other financial crimes. Financial institutions are expected to monitor transactions, maintain effective compliance systems and cooperate with authorities when suspicious activity is identified.
The outcome of the case could also draw attention to the responsibilities of senior bank officials in ensuring that systems designed to detect and report suspicious transactions are properly implemented and followed.
