Alex Mutungi Mutuku, 28, is accused of electronic fraud but he denies any wrongdoing.
The prosecution says he is part of an international network stealing money from several state bodies.
The government says there is a ring involving expatriates from the United States and other countries, along with police officers and civil servants.
A thorough background check on state employees is now being conducted, government spokesperson Eric Kiraithe told the BBC.
Other state agencies affected by the alleged hacking include the e-citizen online payment portal where users pay for government services.
Mr Mutuku was arrested after police conducted an operation following a tip-off that institutions were losing money.
A lawyer for Mr Mutuku, Tacey Makori, has asked for him to be released, arguing that police had failed to show enough evidence to warrant an extended detention.
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