CBK Sets Tough Rules for Bulk Cash Transactions

The Central Bank of Kenya, CBK has put in place more tough rules that are aimed at curbing money laundering as well as unlawful cash transactions.

Things at the counter are not the same for the large cash handlers for they will no longer walk into the bank and match out with large amounts as usual.

According to the Central Bank of Kenya, CBK, anyone depositing or withdrawing more than one million shillings or $10,000 will have to fill a special form.

In the form, one will have to state where the money is coming from, where the money is going to, the purpose of withdrawing such large amounts, who are the direct beneficiaries of the cash, who are the indirect beneficiaries of the cash as well as why can’t the money be deposited or withdrawn through an electronic form which is more secure and open.

These tough measures by the Central Bank of Kenya come amidst claims that there are increased cases of money laundering in the country. This also comes after the collapse of Imperial Bank which its coming down to its knees with huge deposits from customers was blamed partly on money laundering.

According to financial experts, the new guidelines are meant to help and enhance the tracing of bank transactions by the Central Bank of Kenya. This is also one way of encouraging those dealing with huge transactions to start using electronic means in carrying out their transaction activities.

The part of the new guideline states that ‘large transactions which are characterized by informality as well as anonymity make banks to be vulnerable to both the money laundering activities as well the financing of terrorism activities.’

Kenya and the United States of America entered into an agreement where Kenya agreed to always share with USA every financial transaction from any bank that would be above one million shillings or $10,000 where financial institutions are required to submit to the Financial Reporting Center transaction reports and this is under the Proceeds of Crime and Anti Money Laundering being an amendment act of 2012.

From now henceforth, under the new Central Bank of Kenya large cash transaction guidelines, anyone withdrawing more than one million shillings will have to state the following;

1. Where is the money going?
2. What is the purpose of withdrawing such a huge amount of money?
3. Why one is not using electronic methods to withdraw the cash.
4. Where is the money coming from?
5. Who are the direct and indirect beneficiaries of the cash?
6. Where will the money be taken immediately after leaving the bank premises?

Many quarters have welcomed the move by the CBK saying it is the best measure to curb those withdrawing as well as depositing huge amounts from corrupt deals, those depositing and withdrawing huge amounts for money laundering, those depositing or withdrawing huge amounts to fund terrorism and those who have been using the loopholes in the financial system to do fraudulent cash transactions.

Many however feel that the regulations will not hold water for long especially for politicians who are used to withdrawing huge amounts for fundraising functions. They also think that the process will be tedious for companies which often withdraw cash for operations as well as for the payment of their workers.

The privacy of the customers has also been put into question with some quarters claiming that this move leaves those undertaking such huge transactions vulnerable of losing their cash to thugs who might be in collaboration with some unscrupulous bank workers.

This directive will affect hard large retailers, the construction companies, manufacturing companies and those with a large workforce who have to regularly withdraw or deposit cash in bulk.

Article by Juma Fred.