Kenya Bankers Association (KBA) has expressed fears about Kenya's plan to increase the threshold of large transactions reporting from $10,000 [Ksh1.4 million] to $15,000 [Ksh2.1 million], arguing that the plan would expose the country to money laundering risk owing to its strategic location in the region.
The Cabinet recently approved changes to the anti-money laundering laws, revising upwards the limit for reporting sources of money upwards to $15,000, which banks have noted will raise the risk for dirty cash flow in the country.
According to the law, banks are required to ask their clients the sources of their money if the transaction is above $10,000 and are required to report to the Financial Reporting Centre (FRC) any suspicious movement of cash.
"Retain the cash limits at $10,000 or equivalent in other currencies as opposed to the $15,000 or equivalent in other currencies," KBA chair David Nyamato told the National Assembly Finance and National Planning Committee.
The Finance and National Planning Committee is conducting public hearings on the bill that is proposing increasing the limit for reporting among other raft of changes to the anti-money laundering laws.
Kenya has been on the spot over huge transactions that were flagged and whose sources were unknown while others were suspected to be fraud.
According to KBA, the position of the country in the region puts it at risk of attracting dirty cash and facilitating illicit businesses that can be used to fund criminal activities including terrorism.
"Kenya being the largest economy in the region and its role as a transit hub for the Eastern Africa region also poses a significant risk relating to illicit commerce," Nyamato noted.
Kenya is close to Somalia and South Sudan among other countries rocked with instabilities. Some have been accused in the past of using Kenya's financial infrastructure to move money.
Cabinet resolution
On Tuesday, July 18, the Cabinet approved a plan to raise the cash transfer reporting limit to Ksh2 million.
This is as contained in the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill.
The Bill is now before Parliament for debate and public participation.
