The Central Bank of Kenya (CBK) has issued tough guidelines for those wiKShing to exchange KSh1,000 old-generation notes for new ones. CBK Governor Patrick Njoroge told a press conference on Monday that Monday the process will be thorough and conform to Banking Circular No 1 of 2016 on bank transactions and anti-money laundering regulations.
For instance, those wishing to replace old-generation KSh1,000 notes with a value of more than KSh1 million will have to visit their bank branches and fill forms detailing the sources and use of their money.
Those intending to exchange KSh1,000 notes worth more than KSh10 million will have to give three-days notice to their banks. They must provide identification documents of those involved in the transaction and seek approval from their bank branch managers.
For those with KSh1,000 notes of more than KSh20 million or the equivalent will require the approval of the regional branch manager or the senior manager. They must also provide their identity documents and detailed information on the source and use of the cash.
Exchanges can be carried out at the Central Bank of Kenya.
Those with old KSh1,000 notes worth less than KSh1 million can exchange them at any bank in the country.
The new notes will help address growing concerns of illicit financial flows in the country.
“We are going to carry out a prudent exchange exercise that will hopefully address this issue and that of fakes,’’ Njoroge said.
This introduction of new notes follows increased cases of counterfeits.
In March police arrested six people in connection with the seizure of counterfeit notes worth more than $20 million (KSh2 billion) found in a personal safety deposit box at a Barclays Bank branch.
It is also likely to play a major role in the fight against corruption. Most perpetrators are said to be hiding huge amounts of cash in houses to escape any paper trail after CBK introduced strict transaction laws.
An official from Samburu county who was nabbed on Sunday in possession of KSh1 million in cash that he could not explain was arraigned in court yesterday, barely two days after CBK issued the October 1 deadline to transit from old KSh1,00 notes to new ones.
These strict regulations are likely to rekindle opposition from MPs who opposed transaction regulations introduced by CBK in 2016 and reinforced by the Kenya Bankers Association last year.
In February, the National Assembly’s Finance Committee chaired by Joseph Limo summoned the CBK governor, accusing him of illegally imposing the regulations.
The Parliamentary Committee termed the Banking Circular No 1 of 2016 “draconian and unjustified”, adding that Kenyans were being harassed by banks and could not get access to their money.
Yesterday, East African Legislative Assembly MP Simon Mbugua filed a case seeking the removal of CBK Governor Njoroge for allegedly violating the law by introducing new notes and strict disclosure regulations.
He cited lack of public participation as called for thein Constitution by declaring October 1 as the day when the old-generation notes will cease to be legal tender.
Njoroge said, however, that the design and introduction of new banknotes followed due process and said they are ready to fight those opposed to it in court.
Unveiling the new notes, Njoroge said they have a unique theme and features —including the Kenyatta International Convention Centre and the iconic big five wildlife. They will be easy to use by the visually impaired.
“I have been informed of a legal challenge that has just been filed. We are going to deal with those issues as a matter of priority,” Njoroge said.
Yesterday, CBK revealed that at least KSh261.8 billion in denominations of between KSh20 and KSh1,000 notes are in circulation.
The banking regulator said there are 217.6 million KSh1,000 notes, 30.8 million KSh500 notes, 54.8 million KSh200s, 126.4 million KSh100s, 100.5 million KSh50s and 9.9 millionKSh20s.
Njoroge also dismissed those opposing inclusion of the country’s founding president Mzee Jomo Kenyattas sculpture, saying that the key feature was the KICC, not the man.
“The new banknotes bear a significant aspect of our nation, and like the coins, will serve as a means of passing knowledge, conserving culture and promoting our global uniqueness,’’ Njoroge said.
The KSh50 notes have Green Energy, KSh100 – Agriculture, KSh200 – Social Services, KSh500– Tourism, and KSh1000 – Governance.