Penalties totalling 392.5 million shillings ($3.89 million) were imposed on Standard Chartered Kenya, Equity , Diamond Trust, Co-operative Bank and KCB Group, the central bank said.

Dozens of senior government officials and business people were charged in May with various crimes related to the theft of nearly $100 million from the NYS marking a new effort to crack down on widespread corruption.

The regulator said in a statement that the banks had failed to report large transactions and to undertake proper due diligence on customers. It also accused them of approving large transactions without proper documents.

Standard Chartered Kenya said it had received notification of a 77.5 million shillings fine from the central bank and it would fully co-operate in the process.

"Standard Chartered Bank Kenya, together with the Standard Chartered Bank Group, takes its responsibility to combat financial crime very seriously," the bank said in a statement.

KCB said it had also received a formal notification of the fine from the central bank. "KCB Bank remains committed to the respective banking laws across our markets of operation," the lender said.

Diamond Trust and Equity said the central bank had given the banks 14 days to try to argue why the fine should not be levied.

However, the central bank said the five had promised to ensure compliance with all laws in the future and to draw up plans with timetables for sealing gaps that had been identified.

"The central bank is baring its fangs," said Aly Khan Satchu, an independent trader and analyst in Nairobi, saying it was tackling what he called "wild west operations".

"This is a shot across the bows to the banks that if they don't step up, they are going to be fined very severely," he said, adding that these were the biggest penalties from the regulator in recent memory.

The banks had received a total of more than 3 billion shillings from the NYS on behalf of their customers, the central bank said. Findings of its inquiry had been passed to criminal detectives to assess whether they would bring any charges. More banks will also be investigated, the central bank added.

KCB, Kenya's biggest bank by assets, got the largest fine at 149.5 million shillings while Co-op Kenya had the smallest at 20 million.

President Uhuru Kenyatta promised to stamp out graft when he was first elected in 2013, but critics say he has been slow to pursue top officials. No high profile convictions have occurred since he took office.