Demonetisation was a significant step in the fight against corruption
SEE ALSO :‘Help us exchange the expired Sh0.5m’In this regard, a gradual approach over four months was preferred over an abrupt shock and awe approach. Four key elements underpinned the strategy. First, ample public awareness was doubly important, also given that CBK had concurrently launched the New Generation currency. It was critical that Kenyans across the length and breadth of the country were made aware of the ongoing demonetisation but also the features of the new currency. To this end, CBK with support from the banking sector and other stakeholders traversed the country engaging all Kenyans in market places, barazas, streets and bank branches. A multi-channel campaign was also executed, with over 15,000 advertisements, coverage in social media, television, newspapers and over 80 mainstream and vernacular radio stations. Second, it was important to quickly provide and maintain wide availability of the new currency. CBK worked closely with banks to ensure a smooth rolling out of the new currency across the country. CBK’s immediate support to banks and other players was needed to recalibrate the verification and note-counting machines, ATMs, and parking payment machines so as deal with the new notes. Special emphasis was placed on the far-flung areas in the northern and southern parts of the country, cognisant of the heavy use of cash in those regions. To identify any emerging concerns and facilitate their resolution, a robust feedback mechanism including some strategic surveys was also deployed.
SEE ALSO :Counties yet to pay pending billsThird, for the demonetisation to be successful it was essential that existing measures on Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) be applied fully. These measures ensured that illicit funds were filtered out, and not exchanged or entering the financial system. Commercial banks, forex bureaus and payment service providers have over the last few years strengthened their AML/CFT screening, which proved a strong foundation for the demonetisation. Traders in high-value goods also came under increased scrutiny. Additionally, reporting and monitoring was scaled up, with positive results. During this period, CBK conducted 15 targeted inspections on financial institutions, and over 3,000 Suspicious Transaction Reports were reported for further investigation. Fourth, a collaborative approach with other official entities was adopted to buttress the strategy. Investigative agencies were brought onboard to examine the available information for evidence of crimes. Other central banks were also roped in to ensure that escape of counterfeiters and perpetrators of illicit funds through those jurisdictions was thwarted. This approach is akin to an army overwhelming the enemy by attacking on all flanks at once. As the sun set on demonetisation, inflation, the exchange rate and other key macroeconomic indicators remained stable. There were no last-minute panic queues outside banking halls - the awareness campaign had been effective and ordinary Kenyans had exchanged their notes in good time.
SEE ALSO :EPZA sewer dispute costs firms Sh11mStrong filters At midnight when the operation was concluded, old series Sh1,000 notes valued at Sh7.4 billion had not been exchanged, and became worthless. Demonetisation marks a single step in the fight against illicit finance and corruption more generally. Sustained efforts are needed to deliver victory. The strong AML/CFT filters that were applied will continue to be deployed and the information already gathered will also support further investigations by law enforcement agencies. Most importantly, we have created a launch pad for progress towards using less cash for transactions, as we increasingly embrace the readily available mobile and electronic channels. This will make it harder to launder ill-gotten funds, and for cash-based corruption to survive. The successful conclusion of demonetisation is a testament to careful preparation by CBK and close collaboration with commercial banks and other financial institutions, Government agencies, other central banks and, most importantly, the public. We owe Kenya a new beginning, building an economy devoid of corruption. This is the call to each and every Kenyan.
Do not miss out on the latest news. Join the Standard Digital Telegram channel HERE.