12 November 2012

Kenya: CBK Extends Its Fight Against 'Dirty' Money

International money remittance providers will soon come under closer watch of the Central Bank as it intensifies anti-money laundering efforts.

The regulator has drafted new rules -Money Remittance Regulations, 2012- aimed at ensuring remittance providers observe anti-money laundering regulations and help in combating the financing of terrorism activities

Under the new regulations, the institutions will have to monitor and report suspicious activities to the Financial Reporting Center, like customers who do repeat transactions in a day amounting to US$10,000 ( aprox. Sh850,000) to avoid such amounts being reported.

The remittance companies will also be required to have a customer identification program and conduct customer due diligence before carrying out any transaction.

"The purpose of the regulation is to require money remittance providers to observe anti-money laundering and combating of the financing of terrorism measures," said CBK in the policy statement for the regulations posted on its website.

"Money remittance providers shall not allow or process transactions that are or appear to have been deliberately split into small amounts equivalent to US$10,000 or below to avoid the requirement of reporting to the Bank," CBK said.

In June, Kenya was identified among countries lacking strong regulations in money laundering and terrorism financing by the Financial Action Task Force, the body that sets global standards.

But last month it was spared from a further downgrade to the list of high-risk and non-co-operative countries after presenting an action plan against money laundering and terrorism financing.

The plan included making the Financial Reporting Centre fully operational and developing regulations for the Terrorism Act 2012 and the Proceeds of Crime and Anti-Money Laundering Act and implementing them. For foreign companies planning to establish agents in Kenya, CBK may request information or opinion from the host countries.

"Money remittance providers shall not be permitted to act as authorized dealers in gold,engage in lending money,engage in deposit taking,Cheque cashing,maintain current accounts on behalf of customers, establish letters of credit," it adds.

The money remittance regulations also specify conditions for licensing and supervision of those licensed to do remittance business in a bid to encourage increased use of formal funds transfer systems through the facilitation of foreign exchange transfers.

CBK says they will be required to have a minimum core capital of not less than Sh20 million before commencement of operations which should be maintained at all times. The regulations are open for public input before being passed by the end of this month.

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