Kingdom Bank Aided Fraud, Court Makes A Landmark Ruling That Will Open Floodgates For Lawsuits

“The bank was under a duty to demonstrate that it took the necessary steps in recalling the money. However, all that the bank did was to file statements to show how the transaction was undertaken or how the money was withdrawn. There was nothing to show that the bank called for the money from its customer. No evidence of its intention to aid the recovery of the money,” said Justice Mabeya, the presiding judge of the Milimani High Court Commercial and Tax Division.

“While I admit that the bank has a duty to protect its customer’s interests, in this case, the customer fraudulently withdrew money that did not belong to it. The bank had a duty to ensure that it did not aid a fraud and it is not enough to state that the account did not have sufficient funds.”

The case of Kingdom Bank and Alice Wanja Wanjohi

In court papers seen by Kenya Insights, Ms Wanja erroneously sent a total some Ksh50,600 to the Kingdom-linked MPESA till.

She reached out to Safaricom upon realizing the mistake informing them of the erroneous transaction but was instead instructed to reach out to the Bank for assistance.

“On 16/8/2022, a day after the transaction, Safaricom informed the respondent that the reversal request had been transferred to the appellant for resolution,” read the court papers.

On reaching out to the Bank, Wanja was informed the money had already been withdrawn by the receiving customer and could not be recovered.

The Bank produced a bank statement showing that its customer withdrew the funds on the same day the amount landed in the account.

Dejected, Wanja went on to sue the Kingdom Bank at the Milimani Small Claims Court, arguing that the lender acted in breach of care.

She pointed out that the Bank failed to stop a fraudulent transaction and in turn shielded its customer.

The High Court finding now raises the bar of the responsibility of banks in protecting the interests of customers who are not even their own.