The Cabinet had proposed to increase the threshold for cash transactions in Kenya to over Sh2 million, but commercial banks have rejected the idea.
Banks are concerned that this will create more opportunities for money laundering and financing terrorism. The Kenya Bankers Association has warned Parliament that Kenya’s location in the Horn of Africa puts it at risk. Currently, banks are required to report transactions of $10,000 or more to the Financial Reporting Centre.
“Retain the cash limits at $10,000 or equivalent in other currencies as opposed to the $15,000 or equivalent in other currencies,” Mr David Nyamato, chairperson of the KBA compliance committee said.
In December, the Cabinet approved a draft law that would raise this limit to $15,000, but the banking industry is opposed to this idea. Kenya is part of the United Nations Security Council’s Anti-Money Laundering and Combating of Terrorism Frameworks and a member of the Financial Action Task Force. During a meeting with Members of Parliament, Mr Nyamato and KBA’s CFO, Kennedy Mutisya, urged for the establishment of clear guidelines to guide the process of the 2023 Amendment Bill.
They also emphasized the importance of increasing bank reporting thresholds to prevent the risk of money laundering and terrorism financing. Mr Nyamato who represented the KBA says that Kenya is the region’s biggest economy and an important transit hub, which poses a significant risk of illegal trading activities. He notes that the risk of terrorist financing which could potentially disrupt Kenya’s tourism industry increases with a blanket upsurge in the threshold.
