Tougher Rules for Transacting Over a Million Shillings as War on Corruption Intensifies

Kenyans will be forced to give a three-day written notice to banks before transacting over 1 million shillings.

This is the new directive from the Kenya Bankers Association (KBA) to all member banks that seeks to counter corruption.

The move comes after it was discovered that despite the guidelines related to cash transactions of more than 1 million shillings and above which require the banks to take information from any deposit and withdrawal transactions, the guidelines are not observed.

According to a circular from KBA, banks will have to put tougher rules in place that will guide transactions of 1 million shillings and above.

Under the tightened rules, any cash transactions on a single day that will be between 1 million shillings and to 10 million shillings will require the approval of branch manager while transactions between 10 million shillings and 20 million shillings will have to be given greenlights by the regional branch manager or senior manager.  

To transact over 20 million shillings in cash on a single day, customers will require approval from the head of branch banking or director for the transaction to be completed.

In what appears as a move to tighten loopholes of money launders moving large sums of money but in small quantities of at least 1 million shillings, KBA is now going for daily limit as opposed to per-transaction rules.

According to KBA Chief Executive Habil Olaka, the new guidelines are meant to support CBK’s circulars on money laundering to help step up efforts to curb graft through the financial sector.

“The council deliberated on the need to demonstrate a clear commitment to fighting graft as an industry,” said Mr. Olaka.

The regulations related to the cash transactions include the Proceeds of Crime and Anti-Money Laundering Act, 2009, Prudential Guidelines issued by CBK on Proceeds of Crime and Money Laundering (Prevention) and Countering the Financing of Terrorism and Central Bank of Kenya guidelines on the handling of cash transaction above Sh1 million over-the-counter.

As per the new regulations, banks will have to ask the depositors and those who intend to withdraw the source of funds, which will have to be accompanied by supporting evidence, what the funds being withdrawn are for (purpose), why Real Time Gross Settlement (RTGS) cannot be used.

Customers will also be forced to produce copies of their identity cards to banks as well as copies of IDs of all the people who will receive the huge amount of money being withdrawn.