3 October 2012

Kenya: U.S. $10,000 Bank Deals to be Reported

EVERY cash bank transaction exceeding Sh850,000 will soon have be reported to the authorities under new guidelines released yesterday.

The Draft Proceeds of Crime and Anti-Money Laundering Regulations 2012 was prepared by the Financial Reporting Centre, established earlier this year to combat money laundering.

"All reporting institutions shall file reports with the Centre on all cash transactions exceeding Sh850,000 (US$ 10,000) or its equivalent in any other currency carried out by it, whether or not the transaction appears to be suspicious," reads the regulations posted on the Central Bank website calling for comments from the public and industry players.

Banks, microfinance institutions, Saccos and forex bureaus will all be affected. For large, frequent or unusual cash deposits or withdrawals, a person must make a written statement confirming that his business activities generates substantial amounts of cash.

People wishing to buy or sell large amounts of foreign exchange will have to submit a written statement explaining why the money is needed.

The Consumer Federation of Kenya yesterday criticized the draft regulations saying they will punish the majority of law abiding Kenyans. COFEK chief executive Stephen Mutoro said the Sh850,000 reporting threshold was too low.

"The figure should be for amounts of Sh10 million and above," Mutoro said on phone. The Kenya Bankers Association and the Financial Reporting Centre advisory board were unavailable at the time of going to press.

The CBK has organised a stakeholders' forum this Thursday to debate the regulations. A person leaving or entering Kenya is supposed to declare to a customs officer any amount exceeding $10,000.

Customers will also have to justify if they want to operate multiple or nominee accounts. They will also have to explain in writing the reasons for sending large sums of money abroad and provide documentation for the identity of the recipient.

"If a reporting institution becomes aware of suspicious activities or transactions which indicate possible money laundering activities, the reporting institution shall ensure that it is reported to the Centre immediately and in any event within seven days of the date of the transaction or occurrence of the activity that is considered suspicious," the regulations state.

Reporting institutions will be expected to keep records of all transactions for at least seven years. The regulations will also block wire transfers to and from persons or entities designated by the United Nations Security Council as linked to terrorism and terrorist financing.

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