UPDATE 1-Kenya fines 5 banks $3.75 mln under anti-money laundering laws

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NAIROBI, March 5 (Reuters) - Kenya’s chief prosecutor said on Thursday five commercial banks must pay a fine of 385 million shillings ($3.75 million) for violating anti-money laundering laws, adding his office reserved the right to prosecute them in the future.

The five are KCB Group, Equity, Co-op Bank Kenya, StanChart Kenya and Diamond Trust.

The charges related to the theft of nearly $100 million from the National Youth Service (NYS). Dozens of senior government officials and business people were charged in May 2018 with various crimes.

Thursday’s announcement was second time the banks had faced fines. In 2018, the central bank fined the five banks nearly $4 million for failing to report suspicious transactions.

Chief Prosecutor Noordin Haji told reporters that further investigations found the lenders had failed to put in place adequate systems to combat money laundering and failed to know their customers as the law required.

He was deferring prosecuting the banks, he said, to see if they met a deadline to improve their practices.

The chief executives of the five lenders, who flanked Haji as he addressed the news conference, declined to comment. ($1 = 102.8000 Kenyan shillings) (Reporting by Omar Mohammed Writing by Duncan Miriri Editing by Alexander Smith David Evans)