Judge rejects MPs bid to amend law on deposits

A Court has ended MPs push to amend a law that requires someone depositing more than Sh1 million in banks to declare its source.

Justice Weldon Korir yesterday ruled that amendments to the Finance and Banking Act were unconstitutional.

This is because MPs never consulted stakeholders or the public.

MPs last year in October passed Section 65 of the Finance Act, which ushered Section 33C of the Banking Act.

Section 33C overrode the requirement that banks report suspicious transactions popularly known as Know Your Customer Prudential Regulations.

This set the stage where massive transactions could be carried out across the Kenyan financial system without questions being asked.

In his ruling, Justice Korir noted that parliament never denied it did not subject Sections 65 and 33C to public participation.

"The National Assembly went off course and ended up taking an unconstitutional route. It is not farfetched to state that the amendments came out of the blues,” said Korir.

“The DNA of the amendments is, therefore, defective for want of compliance with the constitutional requirement for public participation.”

The Central Bank of Kenya (CBK) was opposed to the amendments from the word go.

Governor Patrick Njoroge while explaining to parliament why he had not implemented the two sections, said that MPs had opened doors for money laundering and at the same time impeded the fight against corruption.

Dr Njoroge said the introduction of the new law meant that MPs made Kenya a safe haven for illicit transactions.

He said that would lead international lenders black listing Kenyan banks and create confusion and chaos in the Banking sector.