This archive report was first published on 20 October 2019.
On September 30, 2019, the withdrawal of old series Sh1,000 notes was successfully concluded, marking a significant step in the fight against corruption in Kenya.
The demonetisation effort, which commenced on June 1, 2019, following the launch of Kenya's new generation notes, aimed to reduce illicit financial flows and counterfeits that posed a threat to the credibility of Kenyan currency.
According to the Central Bank of Kenya (CBK), the old series Sh1,000 notes were being used for illicit transactions and financial flows in Kenya and the region, and the emergence of counterfeits further exacerbated the issue.
CBK examined the experiences of other countries, including Australia, the European Union, Pakistan, the United Kingdom, and India, to design a demonetisation strategy that would balance the objective of addressing illicit financial flows and counterfeits while ensuring minimal disruption to the public and the economy.
A gradual approach over four months was preferred to an abrupt shock and awe approach, with four key elements underpinning the strategy: public awareness, provision of new currency, application of Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) measures, and a collaborative approach with other official entities.
CBK worked closely with banks, other stakeholders, and investigative agencies to ensure a smooth rollout of the new currency and to identify and address any emerging concerns.
At midnight on September 30, 2019, old series Sh1,000 notes valued at Sh7.4 billion had not been exchanged and became worthless, marking a significant victory in the fight against corruption.
The successful conclusion of demonetisation is a testament to careful preparation by CBK and close collaboration with commercial banks, government agencies, other central banks, and the public.
As Kenya moves forward, the use of less cash for transactions will become increasingly prevalent, making it harder to launder ill-gotten funds and for cash-based corruption to survive.
