5 Clever Ways CBK Tamed Money Launderers Before Currency Change Deadline
The Standard newspaper on Tuesday, September 10, intimated that starting this week, many traders in Nairobi have stopped accepting old Ksh 1,000 notes, which is way before the October 1 deadline.
This is an early pointer to the apparent success of the bold move by Central Bank of Kenya (CBK) Governor Patrick Njoroge to announce the shift from the old notes to new notes, a venture that has reportedly had hundreds of billions make their way to the banks.
However, way before the Madaraka Day announcement of the impending worthlessness of the old Ksh1,000 notes, other reforms had already taken place in the banking sector, intending to bring to the open, individuals suspected to be hoarding corruption money.
One of the ways was through collaboration between CBK and DCI, in an attempt to clean out the real estate sector.
The real estate business had been one of the biggest conduits of money laundering in the country and the world in general, which was enough reason why the CBK focused on the industries.
The CBK governor, talking to The Standard newspaper on Monday, September 9, intimated that he had no fears that people would launder money through real estate.
This, he claimed, was because he had entered a collaborative relationship with the investigative agents, who were monitoring the real estate market, to weed out people who were considering cleaning their money through the industry.
He also claimed that ever since their partnership, the value of houses approved for construction by the County Government of Nairobi, has been dropping drastically in the past three years. This, he alleged was because money launderers had been spooked by the sharp eye that has been trained in that sector.
Through the 'Know Your Customer' policy
Another means of stopping money launderers in their tracks was through the introduction of the Know Your Customer law, which generated a lot of storms in both the private and public sectors.
These regulations, which took effect in 2016, were supposed to guard against money laundering and terrorist financing schemes.
In these provisions, anyone withdrawing or depositing more than Ksh1 million was supposed to fill a special form, stating where the money was coming from, where it was going to, and for what purpose.
National Assembly Majority Leader Aden Duale was vocal about the policy arguing that it was too intrusive, sentiments that were echoed by controversial businessman Paul Kobia
Regulation of mobile lenders
Starting July 2019, the CBK introduced a message notification that would inform you whether a mobile lending firm had been approved before receiving a loan.
The CBK governor told the Senate Committee on ICT on July 16, 2019, that the reason for the move was because there such platforms could be used to introduce illegally-obtained cash into the financial system.
The Standard reports that some women in Maringo Estate, Nairobi were given group loans of up to Ksh1 million by an unidentified lender that had its operations on Nacico Plaza on Landhies Road, with the condition that they repay the money in new notes.
These are some of the events that triggered CBK to act and contain mobile money lenders.
Liaising with other countries to block currency change in the form of trafficking and money laundering
The US Embassy in Nairobi announced on September 5, that it would stop dealing in old Ksh 1,000 notes from as early as September 13.
Almost immediately after the announcement was made concerning the new currency on June 1, Uganda and Tanzania declared that the old tender would no longer be welcome in their countries as well.
The UK was also not left behind, and a week after the announcement, British High Commissioner to Kenya Nic Hailey, revealed that investigators from his country were working with the Kenyan Intelligence network to thwart any attempts to change the old notes, which had been acquired through corruption and drug trafficking into sterling pounds.
Raiding the betting industry
Interior CS Fred Matiang' i was in the eye of the storm in July, 2019 over his move to revoke the licenses of 27 betting companies over claims of tax evasion and money laundering. He had ordered that the companies be vetted afresh before the licenses were renewed.
In April, the betting companies were issued with orders to show that they were tax-compliant and to prove that they were acting within the law.
This was reportedly also due to the number of mushrooming betting companies, with gambling viewed as a big conduit for individuals to launder money without attracting the attention of the authorities.
These changes set the ground for the seamless transfer from old Ksh 1,000 notes to the new currency without falling into the holes that other countries attempting the change have.
Njoroge also intimated that CBK expects Kenyans to exchange more of the old currency through banks now that the deadline is looming.
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