The Central Bank of Kenya says crooks have moved Sh320 billion in dirty money in the past eight years which is why it was forced to replace the old Sh1,000 banknotes.
On Wednesday CBK director Kennedy Kaunda testified that Kenya loses an average Sh40 billion in illicit cash flows.
Mr Kaunda was responding in a case filed by Ms Georgina Khaemba complaining that it was unfair to require that returning Sh1 to four million shillings to explain how they acquired the money, and for those with above Sh5 million to obtain endorsement from CBK.
Ms Khaemba described herself as businesswoman “storing money in a safe at home”.
“Among the main culprits has been the use of old Sh1,000 note. This has led to the adoption of the policy to demonetise the Sh1,000 and banknotes,” Kennedy Kaunda, a director at CBK said in court papers.
Mr Kaunda explained that studies conducted over the years revealed that Kenya’s highest denomination facilitates corruption, tax evasion and money laundering.
Ms Kaemba argued that it was discriminatory to categorise banking clients. She added that the directive by Central Bank Governor Patrick Njoroge meant that anyone who had excess unbanked cash either transacted in dirty or blood money.
“The said policy and guidelines are prejudicial to the petitioner herein and other class of few persons categorised as having lots of old Sh1,000 currency bills in excess of Sh5 million who then require investigations and endorsement before such notes can be exchanged for new generation notes,” argued Ms. Khaemba.
The guidelines, which kicked in last month, seem to bite as already two cases have been filed seeking to soften the stand on the old notes and handling huge amounts of money.
The guidelines have not hit Ms Khaemba alone, Anthony Mwongela “a businessman whose business requires hefty amounts of money” has sued Standard Chartered Bank.
Mr Mwongela claims that he trades in stocks, online wallets and cards, cryptocurrency and freelancing.
He sued the lender after he was notified that his accounts would be closed, reason being “statutory hindrances”.
According to Mwongela, he prefers being paid in cash because the trade he is engaged in is unstable.
“At the time of opening the accounts, I declared that the accounts would be receiving hefty amounts of money and that I would be willing to comply with the statutory requirements and I was willing to reveal the source of funds should the information be needed,” averred Mwongela.
He said that on July 11, 2019, Standard Chartered informed him the accounts would be closed.
“The information was relayed to me despite my willingness to supply the respondent needed to support the use of my account. I have been accused of no wrongdoing,” he said asking the court to block the bank from closing his accounts.
“No entity has raised a claim against me for discontent use of the accounts or its large deposits.”
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