CBK To Take Action Against Banks That Neglect Money Laundering Rules

As the deadline for phasing out the old 1000-shilling currency approaches, the Central Bank of Kenya (CBK) has given a warning to bank chiefs who do not adhere to the anti-money laundering rules, saying it will take serious action against them.

The Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations, aimed at combating the illicit flow of money will be applied.

The Central Bank of Kenya (CBK), through its Director of Bank Supervision Gerald Nyaoma, issued a notice to all commercial banks chiefs to be on the lookout not to fall prey to money laundering and terrorist financing offenses even as Kenyans rush to exchange the old 1000 shillings banknotes.

“All commercial banks are reminded to take into consideration the AML/CFT obligations under the Central Bank of Kenya Prudential Guidelines and the Proceeds of Crime and Anti-Money Laundering Act, 2009 (PACAMLA),” said Mr. Nyaoma.

AML/CFT regulations require that anyone depositing or withdrawing more than one million shillings fills a special form stating the source or recipient of the money and the purpose for which it is sent to them.

“We’d like to ensure that all accounts are monitored so all banks ought to be vigilant, or the CBK shall take appropriate enforcement action against any commercial bank that fails, neglects or omits to comply with relevant AML/CFT laws and regulations,” he added.

Already, some traders have begun rejecting the old 1000 shillings banknotes, for fear of being caught up by the September 30^th deadline.

The US Embassy, for instance, is not accepting the old notes, because “of the directive of the Central Bank of Kenya that 1,000 shilling notes of the old design will no longer be legal tender on October 1, 2019”.

CBK Governor Patrick Njoroge announced on June 1^st during the Madaraka celebrations the plans to withdraw old 1,000 notes from being a legal tender as a means of dealing with cases of money laundering in Kenya and in other countries.