Kenya Bankers Association Raises Concerns About Proposed Threshold Change in Anti-Money Laundering Laws
Nairobi, August 21, 2023 - The Kenya Bankers Association (KBA) has voiced its concerns over the government's plan to increase the threshold for reporting large transactions from $10,000 [Ksh1.4 million] to $15,000 [Ksh2.1 million]. The KBA argues that this move could significantly heighten the risk of money laundering, potentially jeopardizing Kenya's strategic position within the region.
In a recent development, the Cabinet granted approval for amendments to the anti-money laundering legislation, which would see the threshold for reporting sources of money elevated to $15,000. Banks have reacted to this change by highlighting the potential for an influx of illicit funds into the country's financial system.
Under the current regulations, banks are required to inquire about the sources of funds for transactions exceeding $10,000 and report any suspicious cash movements to the Financial Reporting Centre (FRC).
David Nyamato, the Chairman of the KBA, strongly advocated maintaining the existing cash limits of $10,000, or equivalent in other currencies, instead of increasing it to $15,000. Speaking before the National Assembly Finance and National Planning Committee, Nyamato expressed concerns about the risks associated with the proposed change.
The Finance and National Planning Committee is currently in the process of conducting public hearings regarding the proposed amendments to the anti-money laundering laws. These amendments include the adjustment of the reporting threshold, among other measures.
Kenya's financial sector has previously come under scrutiny due to substantial transactions that raised suspicions about their origins. Some transactions were flagged as potential instances of fraud, with the sources of the funds remaining undisclosed.
The KBA further emphasized that Kenya's prominent role as the largest economy in the region, along with its position as a transit hub for Eastern Africa, makes it susceptible to attracting illicit funds and facilitating unlawful enterprises that could potentially finance criminal activities, including terrorism.
Considering the country's geographical proximity to conflict-ridden nations like Somalia and South Sudan, concerns have arisen about the misuse of Kenya's financial infrastructure for money movement.
The Cabinet's resolution to raise the cash transfer reporting limit to Ksh2 million was passed on July 18, as outlined in the Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill. The bill is currently under review and awaits parliamentary debates and public participation.