In an effort to protect banks from being used as conduits to channel illegal money following the introduction of new paper currency earlier this month, the CBK has ordered banks to file weekly reports on persons exchanging old notes in large quantities.
While unveiling the new Ksh. 50, 100, 200, 500 and 1,000 notes – in a move aimed at mitigating the circulation of fake currency in the country- the CBK announced that the old Ksh. 1,000 notes will be phased out from the system effective October 31, 2019 . The announcement has caused panic among currency hoarders in the country who have seemingly rushed to get rid of the old generation Ksh. 1000 notes before they become worthless.
Criminals have been left with no choice but to get rid of illegally acquired and counterfeit money and this may present them with the opportunity to swindle banks and unsuspecting Kenyans.
The new protocols by the regulator will also require banks to provide the CBK with information pertaining any transactions undertaken in the financial institutions such as the identification documents of every person involved as well as the source and purpose of the cash.
“Commercial banks shall submit to the CBK periodic weekly reports in the returns attached to the banking circular. These returns should reach the CBK by 9am of first working days of the following week,” reads a circular sent out by CBK to commercial banks on June 10,
“The CBK shall take appropriate enforcement action against any commercial bank which fails, neglects or omits to comply with anti-money laundering laws including submission of returns on time.”
Banks in Uganda and Tanzania have seemingly upped their efforts to deter channeling of Kenyan money acquired through unscrupulous means following the introduction of the new Kenyan currency. The lenders have so far stopped trading in large quantities of Kenyan money.
According to a report released by the United States Department of State Bureau for International Narcotics and Law Enforcement Affairs in December 2018, Kenya was identified as being vulnerable to money laundering and financial fraud as a result of domestic and foreign criminal activities that occur in both the formal and informal sectors.