Money laundering is the process by which a person or organization converts cash and assets gained through illicit activity into a form that can be used legitimately and openly without drawing the attention of the authorities. The name refers to the attempt to “clean” what would otherwise be considered “dirty” money.
Equity Bank is the hardest hit by the investigations of the NYS II as the DCI wants six of its senior officials charged alongside the lender.
The DCI is also targeting five officials from Standard Chartered, four from Diamond Trust, three from KCB and two from Cooperative Bank.
The banks and their officials have been accused of breaching sections 3b(iii), 11(1) and 10(2) of the Proceeds of Crime and Anti-Money Laundering Act.
Section 3b(iii) outlaws aiding of criminals to move money or other assets that are proceeds of crime, and the offence comes with a maximum 16-year jail sentence.
Section 11(1) puts on the spot banks that fail to monitor and report large or suspicious money transactions to the CBK and FRC.
Institutions that violate this law face fines of up to Sh2.5 million, while individuals could be fined and thrown in jail for up to seven years.
Section 10(2) flags any individual or institution that gives false information to the CBK and FRC that could derail detection of money laundering. The crime incurs a fine of Sh1 million, a jail term of up to two years, or both.
Over 40 individuals and firms were last year charged with the theft of Sh468 million from the NYS after Mr Haji indicated that prosecution will be done in batches.
The scandal caused genuine firms huge losses after their supply contracts were duplicated and used to pay dubious individuals who had not delivered any goods or services to the state agency.
Among those charged are former Youth Principal Secretary Lilian Omollo, former NYS director-general Richard Ndubai, ex-senior deputy director Nicholas Ahere, former acting finance officer Willington Lubira, and former chief accountant Clement Murage. Several businessmen have also been charged over the scandal.
Standard Chartered received Sh1.628 billion that was paid to Firstling Supplies, Active Electrons Africa Limited, Flagstone Merchants Limited and Excella Supplies.
Businessman James Thuita Nderu and his estranged wife, Ms Yvonne Wanjiku Ngugi, own the four firms.
Former PS Thuita Mwangi with his lawyer Paul Muite
Detectives flagged Sh558.58 million that was moved with the help of five Standard Chartered officials who did not alert CBK and FRC of the large transactions.
Cooperative Bank handled Sh250 million, which went to Sambeat Investments and former Kirinyaga Woman Representative Winnie Karimi Njuguna.
Our source described Ms Njuguna as “politically connected” but did not substantiate.
Of the Sh250 million, detectives flagged Sh25 million, which should have been reported to the CBK and FRC but was not.
Payments of Sh886.42 million were also made by the State Department for Public Service and Youth Affairs on behalf of NYS to Equity Bank.
Our source did not disclose who the beneficiaries were, but said the lender’s officials aided the movement of Sh264 million without reporting to the relevant authorities.
Another Sh800 million was wired to Kunjiwa Investments, Annwaw Enterprises, Jerrycathy Enterprises, Waluco Investments and Lucy Wambui Ngirita.