The recent Bank regulation by CBK brought about a heated debate, especially with our politicians. The regulation was that one cannot withdraw more than Sh1 million a day or make big deposits without attracting the hawk-eyed Financial Reporting Centre, which is responsible for detecting and reporting such transactions. Anyway, that was expected from them since most of us can hardly afford to even withdraw that large amount of money. The governor was accused of using circulars and memos to regulate banking rather than through regulations that must be approved by the National Assembly. In case you are wondering what the act is about, well, in 2018, MPs passed the Finance Act, which requires the CBK boss to publish regulations governing the banking industry within 30 days of their coming into force.
The CBK boss told MPs that less than 0.7 per cent of bank accounts in Kenya have a balance of more than Sh1 million.CBK Governor Patrick Njoroge has said that the majority of Kenyans have less than Sh1 million in their bank accounts. Njoroge spoke on Tuesday when he appeared before the Parliamentary Committee on Finance. He further defended banking regulations that require full disclosure of cash transactions exceeding Sh1 million.
He said the regulations as enshrined in Section 33c of Banking Laws are in line with the International Anti-money Laundering regulations. Njoroge said if Kenya goes against global measures by doing away with Section 33c, the country will be cut off from the international financial fabric.”Consequences of doing away with anti-money laundering are harsh. Kenyan banks will be blacklisted in the international market with international banks operating in the country recalled. Kenya will be regarded as a safe haven for money laundering,” Njoroge said.
He dismissed Parliament’s claim that some aspects of the Banking Act that took effect on October 1 last year are illegal. Njoroge said only the CBK has the mandate to determine transaction limits and that the amendment to the Act followed all procedures as required by law. He said that regulations capping bank transactions are in the best interest of the country. ”We remain vulnerable to money laundering and terrorist financing due to our geographical location. We, therefore, have a task to ensure illicit financial flows are not happening via our financial institutions,” Njoroge said.