Over the course of the week, several inputs and insights have been explored regarding the release of new local currency that should come in effect fully by October, 2019. The CBK, through its Governor Patrick Njoroge, announced that people with current notes should make sure they have exchanged them for the new and redesigned notes in a four-month window. Failure to do so will render them useless.
The exchange exercise, which has since begun, is marked by a series of tough regulations. To begin with, the CBK says that people who do not have bank accounts will not be able to exchange notes valued over KES 1 million. Specifically, the CBK says the rule has been put in place to safeguard against unmanaged withdrawal of existing KES 1000 notes from circulation. According to the Daily Nation, those without bank details will be forced to open one, else they will lose their priced currency. The communication was reiterated by Governor Njoroge.
Evidence of source of money
America’s IRS installed an anti-money laundering law, which tasked banks to report cash transactions of more than US$ 10,000. The regulation has since trickled down to other parts of the world, including Kenya. It is a common practice for local banks to apprise the CBK of such transactions. It is also common knowledge among many Kenyans, some of whom may try to ‘clean’ ill-gotten money by using state agencies such as banks to sanitize their deeds. To this end, the CBK is reminding banks and people that folks who will take advantage of the notes exchange process will be nabbed and prosecuted.
Any cash exchange of more than KES 1 million must be accompanied by legitimate documentation. Furthermore, the regulator says it must approve all currency notes exceeding KES 5 million.
The growth of mobile money services has seen a matching jump in agents who serve millions of customers. While the mobile money was primarily popularized by M-PESA services, the industry now includes other players such as banks that have since launched mobile money products. At the moment, banks have more than 60000 bank agents, in addition to carrier mobile money agents that are in the excess of 220,000.
According to the Kenyan Bankers Association (KBA), bank agents will be under scrutiny during the note exchange exercise after the organization installed a new system that will automatically identify and flag suspicious activities. The development is necessitated by the fact that agency banking performs millions of transactions worth more than a trillion shillings.
According to Business Daily, banks are in the process of updating their systems to accommodate the new currency. The upgrade process entails the reconfiguration of ATMs and software updates. KBA admits that some machines will experience issues as the exercise progresses.