The High Court of Kenya rules in favor of Co-operative Bank of Kenya, confirming that the bank acted lawfully when it reversed Ksh10 million ($77,519.37) deposited into a client’s account without proper documentation.
This decision reinforces Kenya’s anti-money laundering laws and highlights the need for financial compliance.
The case involves George Ng’ang’a Mbugua, an Advocate of the High Court of Kenya and owner of Mbugua Ng’ang’a & Co. Advocates.
On October 19, 2023, the County Government of Murang’a deposits Ksh10 million ($77,519.37) into his account at Co-operative Bank’s Nairobi Business Centre Branch.
The bank immediately asks Mbugua to provide documents verifying the source and purpose of the funds.
Mbugua submits a fee note, decree, and payment voucher but fails to provide the contract letter of engagement, a key document.
Since the bank finds the provided paperwork insufficient, it reverses the entire amount to the County Government of Murang’a. This action follows Kenya’s Proceeds of Crime and Anti-Money Laundering Regulations, 2023.
On October 27, 2023, Mbugua files a constitutional petition against the bank.
He claims violation of his right to fair administrative action, right to property, and consumer rights.
He demands a refund of Ksh10 million and an additional Ksh5 million ($38,759.68) in damages.
Co-op Bank’s lawyer, Paul Wanga, defends the bank’s decision. He explains that it follows anti-money laundering laws and Know Your Customer (KYC) regulations.
The bank repeatedly asks Mbugua for complete documents but does not receive them.
On March 13, 2025, Justice Peter Mulwa delivers the ruling. He states that Co-op Bank acted lawfully, reasonably, and in good faith.
The bank gives Mbugua multiple chances to provide the required documents but receives incomplete information.
The court finds the reversal appropriate and compliant with the law. It also rules that the right to property is not absolute and can be limited to prevent money laundering.
Then, the judge dismisses the petition and orders both parties to bear their own legal costs.
This ruling strengthens Kenya’s financial compliance rules. It reinforces that banks must verify high-value transactions, ensure complete documentation, and report suspicious activities to the Financial Reporting Centre.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]
