Bank customers planning to withdraw or deposit Sh10 million and above in cash will now be required to give a three-days’ notice and get clearance from branch managers.
The new tough rules announced Monday by industry lobby, the Kenya Bankers Association (KBA), are aimed at sealing loopholes for money laundering and financing of terror.
The KBA, in a circular, directed bank managers to ensure customers also provide supporting evidence for their source of cash when depositing and its use while withdrawing.
KBA said the stringent self-regulation will reinforce the existing ones on disclosure and reporting of suspect cash transactions.
The law currently requires financial institutions to report any suspicious or unusual transaction to the Financial Reporting Centre (FRC) – the agency operationalised in April 2012 mandated to identify and combat money laundering and financing of terrorism.
Banks were, however, found to have been complicit in the first National Youth Service (NYS) scandal in late 2015 in which about Sh1.8 billion of taxpayers’ money was stolen.
Customers transacting from Sh10 million over the counter will also be required to disclose why they can’t use Real Time Gross Payment System (RTGS) – the channel for transactions of more than Sh1 million.
They should also attach copies of their ID or Passports and those of all payees or beneficiaries.
Branch managers will only approve withdrawals or deposits of between Sh1 million and Sh10 million under the fresh stringent rules, with regional branch managers required to sign off transactions between Sh10 million to Sh20 million.
Any cash deals of more than Sh20 million must be approved by head of branch banking or a director of the bank under the guidelines copied to the Central Bank of Kenya (CBK) governor Patrick Njoroge.