Bill proposes stiff penalties for hoarding dollars

A bill proposing stiff penalties for individuals or entities accumulating foreign currency for speculative purposes has been tabled in the National Assembly by Rongo MP Paul Abuor.

The Forex Hoarding Criminalisation Bill by the Rongo MP also proposes amnesty for those who are willing to release the hoarded dollars into the market.

The proposed law seeks to address foreign currency hoarding which has adverse effects on the country’s economy and the shilling.

The Bill proposes a fine not exceeding Sh1 million or imprisonment for a term not exceeding 10 years for individuals found guilty of hoarding foreign currency beyond their reasonable needs while entities found guilty of currency hoarding pay a fine not exceeding Sh10 million or revocation of relevant licenses.

“Individuals or entities found guilty of repeated forex hoarding offenses shall be subject to increased penalties including higher fines and longer terms of imprisonment, if this Bill is implemented it may lower the cost of living and alleviate some pressure from the Kenyan shilling,” said Abuor.

The MP said there is evidence that suggests artificial currency hoarding for speculation purposes and a lack of faith in the Kenyan economy because of the current challenges, notably excessive debt financing.

According to Central Bank of Kenya data, local foreign currency deposits grew from Sh800 billion in August 2022 to Sh1.2 trillion by the end of July 2023.

The Bill seeks to cushion the Shilling from further slide against foreign currencies particularly the US dollar.

The Kenya Shilling has dropped by more than 14 per cent against the US dollar since January.

The MP who addressed Journalists at Parliament Buildings, Nairobi, Wednesday, said that the Kenya foreign exchange market uses free floating exchange rate that is established solely by market forces where one is free to buy or sell dollars and operate a forex account, however extraordinary circumstances necessitate extraordinary actions.

“Without interfering with market forces Kenya cannot enjoy the luxury of unscrupulous Kenyans purchasing US dollars for speculative purposes denying genuine Kenyan businessman from purchasing dollars in the local market so as to promote trade both domestically and internationally,” said Abuor.

The Bill seeks to establish the Forex Management Authority as a semi-autonomous regulatory body under the National Treasury with the mandate to regulate and supervise the activities of market participants including forex brokers, dealers and other entities in order to ensure the integrity, transparency and stability of the foreign exchange market.

The authority will be responsible for licensing, regulating and supervising forex brokers, dealers and other market participants, monitor and ensure compliance with applicable laws, regulations and guidelines related to foreign exchange trading money laundering and other financial crimes.

“Whistleblowers who report forex hoarding activities in good faith are protected from retaliation and are entitled to 10 per cent of the amount involved, the law shall provide mechanisms for anonymous reporting and establish appropriate channels for reporting such activities,” said Abuor.