This archive report was first published on 14 July 2019.
As the October 1 deadline for the old Sh1,000 banknote looms, the Government is working to seal the gaps being exploited by money launderers to clean their ill-gotten wealth.
According to sources, investigators are focusing on Forex Bureaus, which are being accused of lax know-your customer (KYC) guidelines that are allowing money launderers to operate freely.
Bank executives have been instructed to intensify their vigilance, which will see customers subjected to ultra-vetting while withdrawing or depositing cash.
There are reports that some credit-only microfinance institutions have been aggressively offering loans in rural areas, asking borrowers to repay the loans after October.
Additionally, unscrupulous big cash handlers, including big retail firms, are reportedly hoarding the new currency and trading them off.
Efforts to reach Central Bank of Kenya (CBK) Governor Patrick Njoroge for comment on the challenges being experienced with the currency were futile.
CBK Bank Supervision Department Director Gerald Nyaoma said he was not in a position to comment on the matter, stating that only the CBK Governor could provide a comprehensive report.
However, other sources within the CBK confirmed that they had not noted any changes in banking patterns over the period, but there was a possibility that bank officials could be colluding with money launderers.
Kenya Bankers Association CEO Habil Olaka asked members to be vigilant against money launderers, stating that the mopping up of old notes was smooth.
Weeks after the introduction of the new currency notes, the Shilling weakened against the US Dollar, indicating that it was under pressure as people sought more of the American currency.
The Financial Reporting Centre (FRC) has held two high-level meetings with financial players in an effort to crack down on individuals said to be hoarding billions of illicit cash.
Insider sources at the meetings said the FRC had impressed on the forex bureaus to strictly enforce KYC guidelines and report any suspicious transactions to the CBK.
However, FRC fears that criminals might be splitting the money and spreading it across forex bureaus, and that the bureaus are not providing the Government with information on individuals and suspicious transactions.
Despite the Government's efforts to crack down on illicit finance, sleuths say they are yet to see any significant development in the fight against money laundering.
CBK Governor Patrick Njoroge had announced that the Sh5, Sh100, Sh200, and Sh500 banknotes would continue circulating alongside the old currency notes, but the old Sh1,000 series would be withdrawn by October 1.
