Egyptian Lender CIB Bank Put On FRC Probe Over Alleged Money Laundering

Commercial International Bank Kenya is under investigation by the Financial Reporting Centre over a suspicious cross-border transfer of Sh69.5 million from Laos, raising fresh concerns about compliance gaps in Kenya’s banking sector.

The Egyptian-owned lender is facing scrutiny after allegedly facilitating the wire transfer of $523,599.85 from Phongsavanh Bank Ltd, a mid-tier Laotian bank, through the account of a Nairobi-based law firm. According to a confidential report dated September 22, 2025, the transaction has been flagged as part of a potentially sophisticated money-laundering scheme.

The Financial Reporting Centre has forwarded the matter to the Kenya Revenue Authority for further investigation, citing possible breaches of the Proceeds of Crime and Anti-Money Laundering Act. Under POCAMLA, banks are required to subject cross-border transfers to stringent checks, particularly when they involve unusual sources, opaque beneficiaries, or uncommon transaction volumes.

The funds originated from Laos, a country better known for its agricultural economy than formal financial ties with Kenya. Laos’ banking sector has been repeatedly flagged by the Asia/Pacific Group on Money Laundering for weak financial controls and delayed anti-money laundering reforms. The country underwent an assessment in September 2022, with the evaluation report adopted in July 2023 noting significant gaps in its legal and institutional framework for combating financial crimes.

Investigators were immediately alarmed by the transaction, given that the Laotian entity does not appear in Kenyan business records and there is no clear rationale for such a substantial transfer through a Nairobi law firm. The account holder reportedly told investigators the money was intended for Kenya’s Affordable Housing Programme, President William Ruto’s flagship initiative to deliver 250,000 housing units annually.

However, this explanation has raised eyebrows among financial crime experts. The Affordable Housing Programme is predominantly funded by Kenyan taxpayers through a contentious 1.5 per cent housing levy, matched by employers. By June 2025, the state had already collected Sh73.2 billion from this levy. The appearance of an obscure Laotian firm with no footprint in Kenyan real estate injecting millions into an already well-funded programme has fuelled suspicion that the housing scheme was merely a convenient cover for illicit funds.

CIB Kenya’s recent history adds complexity to the probe. Formerly Mayfair CIB Bank, the institution was fully acquired by Egypt’s Commercial International Bank in January 2023, marking a strategic expansion into East Africa. The acquisition, approved by regulators in Cairo and Nairobi, was expected to stabilize the mid-sized lender, which had struggled following the Covid-19 pandemic. Since the takeover, the bank has modernized branches, rolled out digital products, and positioned itself as a champion of small and medium enterprises.

At the helm is CEO and Managing Director Abhinav Nehra, a veteran banker with over 35 years of experience across Africa, Asia, and the Middle East. Nehra has promoted CIB’s five-star banking approach, emphasizing SME lending, cashflow-driven financing, and stronger trade links between Kenya and Egypt.

However, this unfolding scandal threatens to undermine that carefully cultivated image. When contacted for comment on the allegations, Mr Nehra did not respond to detailed questions about the bank’s compliance procedures. Specifically, CIB Kenya was asked whether it adequately verified the beneficial owner of the Laotian sender, whether the Nairobi law firm’s role was thoroughly scrutinized, and whether the bank froze the funds or initiated an internal audit after the FRC alert.

The silence has only deepened concerns about transparency at the institution. In an era when financial institutions are expected to respond swiftly to public concerns and maintain open lines of communication with regulators, the lack of a statement from CIB Kenya raises questions about the bank’s handling of the matter.

Kenya’s financial system has long been vulnerable to money-laundering networks, from gold smuggling cartels to cryptocurrency fraud. A recent FRC report revealed that Kenyan banks handled suspicious money amounting to Sh6.38 trillion between 2021 and 2024, with transactions often conducted through shell companies that concealed the identities of those involved.

Foreign-owned banks, with their international reach and cross-border capabilities, pose even greater risks when compliance systems fail. While CIB Kenya’s parent company in Egypt boasts a strong compliance track record amid that country’s volatile economic climate, this incident raises doubts about whether the same standards are being upheld at its Kenyan subsidiary.

For small and medium enterprises, which form the backbone of Kenya’s economy and are the very clientele CIB claims to champion, confidence in financial institutions is paramount. A single compliance lapse can erode trust built over years and undermine the bank’s stated mission of supporting economic growth.

The Central Bank of Kenya, which supervises and enforces compliance with POCAMLA, has yet to issue a public statement on the matter. Under the law, banks that fail to adequately screen cross-border transactions or report suspicious activity face significant penalties, including fines of up to Sh5 million or imprisonment for responsible officers.

As investigations continue, the case serves as a stark reminder of the importance of robust anti-money laundering controls in Kenya’s banking sector. With international watchdogs increasingly scrutinizing financial flows from jurisdictions with weak regulatory frameworks, banks operating in Kenya must demonstrate that they have the capacity to effectively vet and police cross-border transactions.

The outcome of the FRC probe will be closely watched by regulators, industry players, and customers alike, as it will set a precedent for how seriously Kenya takes its obligations to prevent money laundering and maintain the integrity of its financial system.