Corrupt individuals biggest losers as new currency out

The new currency notes released by the Central Bank of Kenya. Their introduction is touted to target money laundering and tax evasion. [Wilberforce Okwiri, Standard]

Individuals hoarding proceeds of corruptions are some of the biggest losers as Central Bank rolls out new currency.

From October 1, the old Sh1,000 notes will cease being legal tender, effectively rendering them worthless pieces of paper.

While the Central Bank governor Patrick Njoroge announced that the new Sh50, Sh100, Sh200, Sh500 notes would circulate alongside the old notes, he said the Sh1000 notes would cease being legal tender in the next four months.

The coming period expected to be frantic as individuals trade in the old currency before the period lapses.

But as the clocks starts counting down to October 1, sleuths, empowered by a firm anti money laundering law, will be closely scrutinising bank transactions.

The government’s announcement of the new notes comes in the wake of proliferation of counterfeit currency with detectives having seized about Sh40 billion in fake currency since January.

“We have assessed the grave concern that our large banknotes – particularly the older one thousand shilling series – are being used for illicit financial flows in Kenya and also other countries in the region.

“More recently we have seen the emergence of some counterfeits. These are grave concerns that would jeopardise proper transactions and the conduct of commerce in our currency,” Central Bank of Kenya governor Patrick Njoroge said.

Besides move also targets money laundering and tax evasion since those suspected to be hoarding money in houses now forced to exchange the currency for the new notes.

In May 2017, detectives found a hoard of Sh18million stashed in the house of a National Land Commission official who was under investigation for corruption.

In October last year, police in Nairobi have recovered fake money valued at Sh3 billion at a house in Westlands.

Four months later, a hoard of Sh32billion in fake currency was also disoivered in a residential house in Ruiru.

A month later, detectives found Sh2billion in fake currency found at a safe in Barclays Bank Queensway branch, Nairobi.

According to Central Bank of Kenya’s 2018 analysis of currency circulation, the Sh1,000 notes in circulation were valued at Sh210.37billion by June 2018. Comparatively, those of Sh500 were only Sh16.31 billion.

The withdrawal of the currency also comes as CBK enforcing closer scrutiny of financial transactions.

Transactions exceeding Sh1 million require the approval of the branch manager while cash transactions of Sh10 million to Sh20 million or the equivalent will require the approval of the regional branch manager or the senior manager.

Bank customers are required to give a three-day notice to make over the counter transactions of more than Sh10 million, and provide supporting documents such as the source of the money, the purpose for withdrawing the funds.