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CBK issues tough rules in exchange of old notes

Thursday June 6 2019

Central Bank of Kenya

Central Bank of Kenya Governor Patrick Njoroge displays new notes at his office in Nairobi on June 3, 2019. The phasing out of old notes will be concluded by October. PHOTO | SILA KIPLAGAT | NATION MEDIA GROUP 

PAUL WAFULA
By PAUL WAFULA
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Without a bank account, you will not be able to exchange more than Sh1 million of old currency with the new notes.

In another measure meant to shield abuse of the withdrawal process of old Sh1,000 notes from circulation, the Central Bank of Kenya (CBK) has directed commercial banks to seek its express approval before allowing such a transaction.

“Any person without a bank account who shall be in possession of currency notes of an amount exceeding Sh1 million shall require the endorsement of the CBK before exchanging the notes,” CBK Governor Patrick Njoroge says in the regulations that will guide the process.

This means that Kenyans with such huge amounts will be forced to open a bank account or lose their money.

It will also make it harder for those with ill-gotten cash to pick random people to help them clean their dirty money through the financial system.

SOURCE OF FUNDS

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Kenya is withdrawing the old Sh1,000 note with a new note in an exercise expected to be complete by October 1.

Even with a new bank account, it will be reported as a suspicious activity if a new account holder all of a sudden stuffs his account with more than Sh1 million, or seeks to exchange it in cash and walk away without proper documentation on proof of source of funds.

According to the regulations, all currency notes for an amount exceeding Sh5 million will also not be exchanged without consent from the CBK, even for old account holders.

Only those with bank accounts and whose banking history checks out will be allowed to exchange Sh5 million and below without having problems at the counters.

EXCHANGE POINTS

Besides branches of commercial banks across the country, those who want to exchange the old notes with new ones can also do so at CBK head office on Nairobi’s Haile Selassie Avenue. Other CBK branches are in Mombasa, Kisumu, Eldoret, Meru, Nakuru and Nyeri.

But it will be a tough call and expensive for Kenyans living in areas far away from commercial banks.

The Kenyan currency is also used within the region, especially in Uganda, Rwanda and some parts of South Sudan, where some establishments accept Kenyan notes.

Those who will not have exchanged this amount by October 1 will end up with useless notes.

COURT CASES

This comes at a time when resistance on the implementation of currency change is building with already two cases opposing it filed in court.

On Wednesday, Kenyans on social media pointed out an image of someone who looks like Interior Cabinet Secretary Fred Matiang’i on the Sh200 note as another breach of the Constitution.

Dr Matiang’i picture was taken when he was in a class alongside pupils during the testing of the laptop for schools.

Commercial banks said they will reconfigure their ATM machines and currency counters to allow them dispense the new currency.

There are approximately 1,700 ATM machines, 780 branches and 66,000 bank agents countrywide.