Kiambu Town MP Jude Njomo now wants commercial banks linked to the fresh National Youth Service (NYS) Sh8 billion scam to be blacklisted and their licences revoked.
Njomo argues that it is criminal for banks to aid alleged theft of public money.
According to the MP, rogue banks that have failed to adhere to the sector's regulations have no business operating.
Speaking to journalists at Parliament Buildings in Nairobi on Monday, the Jubilee MP asked the government investigative agencies to leave no stone untouched and expose all individuals behind the fresh NYS scandal.
"We must put corruption and impunity to an end and stern action taken against those involved including commercial banks,” he said.
The MP said the country’s commercial sector is not properly regulated and asked the Central Bank Governor to ensure the sector's laws and regulations are followed strictly.
In the 2015 Sh791 million NYS scandal, some banks were named leading to the arrest and prosecution of their employees.
Several banks are under probe for wiring looted NYS cash to suspected individuals, some of whom have confessed to receiving millions of shillings yet they did not supply anything to the department.
In a press briefing at his office on Monday, Director of Public Prosecutions Mr Noordin Haji said that the probe will involve a multi-agency team.
He said that no one will be spared, adding that his office is committed to fighting corruption.
Several top government officials among them Public Service Principal Secretary Lilian Omollo and NYS Director General Richard Ndubai were arrested on Monday and will be arraigned in court today (Tuesday) to face corruption charges in relation to NYS scam.