CBK Governor Patrick Njoroge Tuesday warned MPs planning to scrap the anti-money laundering Act that was put in place to curb against vices.
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.
Less than 1 per cent have Sh1million
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.
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.
Procedural fiscal conduct
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.