Banks
Banks Warn of Tougher Measures to Rein in Illegal Cash
In a move aimed at curtailing the country’s underground economy, the Kenya Bankers Association has vowed to tighten control over Sh1,000 notes. This comes as Kenyans have been given until October 1st by the CBK to surrender the old notes.
The banking lobby warns that it will be hard for people to return illegally earned money that was stored away from circulation, notably the Sh1,000 note. It is the most preferred because of its high value and also because it is the highest denomination of Kenyan money available.
According to Habil Olaka, the KBA chief executive, demonetization of the notes is a move designed to catch those who hide money that is acquired illegally or is undeclared for tax purposes.
“Controls are in place to ensure that the money does not find its way to the formal financial system easily. The system will be checking whether it is from genuine proceeds or crime, which includes corruption,” he said. He also pointed out that property acquisition would not bypass scrutiny.
“Even if you buy cars, whomever you buy from using cash will still have to identify where the money is coming from, so it is not an easy way out,” he said.
Mr. Olaka expressed confidence in the success of the exercise, noting that banks have started initiating stern regulations reinforce their ability to protect themselves and their customers against potential financial crimes.
Five banks that had been fined Sh392.5 million previously for handling money worth billions of shillings that had been stolen from the National Youth Service (NYS) have already taken steps to minimize the risk of recurrence.
The banks; Equity, KCB, DTB, Co-op Bank and Standard Chartered Bank (Kenya) stated in their annual reports that they had put measures in place to shore up their fight against financial crimes.
KCB mentioned that actions have been taken to reacquaint their staff on all the processes and regulations to be followed in the case of suspicious transactions whereas StanChart cited the enhancement of controls around payments and cash received from the government and government-related bodies.
