At least 900 accounts have been flagged by the Central Bank of Kenya (CBK) for making suspicious deposits as the exchange of the old 1,000 notes ends today.
The fate of some of these unusual deposits will be known starting later this week as the curtain comes down on the demonetisation process.
A top official who spoke to The Standard but asked not to be identified said authorities investigating the issue had agreed that the owners of the accounts could only be contacted after the closure of the three-month window, so as not to raise the alarm, which would otherwise scare others from making deposits.
It could not be immediately established how much the cumulative deposits are worth but the investigators say the amount is “significant”.
Officials involved in checking for possible money laundering have disclosed that a meeting will be held on Wednesday to assess the integrity of the doubtful accounts.
“We will be reaching out to the account holders after our meeting to investigate the rather suspicious transactions,” said the official.
Some of the accounts that had been flagged have since been cleared as the depositors were found to be big traders.
“Most of those we have cleared are businessmen who have been making such deposits in the past,” said a detective involved in the probe.
CBK Governor Patrick Njoroge said there will be no extension of today’s deadline to return the old Sh1,000 banknotes that will cease being legal tender.
He said it will take two to three years to phase out the other denominations.
He refuted claims that there is a shortage of the new Sh1,000 note. “I can tell you for sure that there will be absolutely no extension after the September 30 deadline, whether or not people will have returned the notes,” said Dr Njoroge.
Banks have been on alert since June 1 when CBK announced the demonetisation, reporting accounts that made suspicious deposits.
This was because of suspicion that corrupt individuals who had been hoarding the notes would take advantage of the rush to bank the money.
Those engaged in land buying, investment in shares, buying of vehicles and running big businesses were put on the radar in the period.
The Financial Reporting Centre and Banking Fraud Investigation Unit were given a list of the depositors to check their deals and established most of them were justified in the deposits.
“Most of these were supermarkets, warehouses or foreign exchange bureaus. So far nothing unique detected, we wait for the next round,” said another official aware of the probe.
Most of the individuals are said to have deposited more than Sh5 million.
“Unless those changing the money used these known entities to do so it is difficult to accuse them of laundering for now,” said the official.
CBK had alerted commercial banks on the need to look out for those who may circumvent the rules on laundering and terrorism in the rush ahead of the deadline.
The Government on June 1 ordered the return of old Sh1,000 notes, saying they will cease to be legal tender on October 1.
Last week, the regulator raised an alarm over large transactions of Sh1,000 old notes in Narok County.
“We have a problem with Narok where wheat is currently being harvested. We have seen an influx of buyers purchasing wheat in cash and those transactions are quite a concern to us,” said Njoroge.
Director of Public Prosecution Noordin Haji directed the Ethics and Anti-Corruption Commission and police to take measures to preserve the value of old Sh1,000 notes held as exhibits in court.
He directed that all pending cases where the old notes were being held as exhibits be mentioned in their respective courts for appropriate orders.