Big cash transactions worth more than Sh1 million fell to a 17-month low in October as Kenyans hoped to take advantage of a presidential directive to raise the limit on cash withdrawals and deposits.
Data by the Central Bank of Kenya (CBK) shows that bulk transactions totalling Sh2.55 trillion were cleared and settled through the real-time gross payment system (RTGS) and the Kenya electronic payments and settlement system (KEPPSs) in October.
That was a 20.7 percent drop compared with nearly Sh3.22 trillion handled a month earlier as Kenyans took a waiting stance hoping to capitalise on the presidential directive that would have handed them the convenience of bigger cash transactions
The bulk bank transfer deals in October were the lowest since May 2020 when Covid-19 shutdowns and restrictions had plunged the economy into a trough.
President Uhuru Kenyatta on October 20 directed the Treasury to engage stakeholders and come up with a higher threshold for cash deposit and withdrawals in banking halls than the current $10,000 (Sh1.12 million).
Mr Kenyatta has argued that implementation of the limit for cash deals by banks, aimed at curbing money laundering, “has been onerous for Micro, Small and Medium Enterprises (MSMEs)” which largely transact in hard cash.
Suspicious transactions
The CBK, the financial services sector regulator, requires banks to strictly process and settle payments from Sh1 million through the real-time RTGS/ KEPSS system where cash reflect within two-four hours of getting instructions under guidelines refreshed in October 2009.
The real-time transaction-by-transaction payments enable the CBK and banks to scrutinise and flag suspicious or unusual transactions that may be linked to money laundering or financing of terrorism.
“The transformation of our economy and the emergence of our nation as a financial hub is as a result of the efficiency secured by technology,” Mr Kenyatta said.
“The gains we have made in the digitalisation of financial processes and transactions have made it possible for us to better track and trace illicit flows of money.”
Businesses and individuals transacting more than Sh1 million are required to declare to their bankers why the money cannot be deposited or withdrawn through electronic means under KEPSS/RTGS.
The disclosures include the source of the cash, how it will be spent, who are direct and indirect beneficiaries as well as the full identity of the intended beneficiaries. BY DAILY NATION