The Directorate of Criminal Investigations is investigating cases of suspicious cash transactions that have been flagged by banks during the on-going demonetisation of Sh1000 note.
Central Bank Governor Patrick Njoroge says some of those cases are of people who wanted to change over Sh5 million to new currency notes.
“We have shared the information we have gathered so far with the DCI for further investigations. Our role as the regulator is to work the investigating agencies to ensure that we achieve our goal,” Dr Njoroge said on Thursday night on Citizen TV.
He said investigations on people holding illicit money would continue even after the old notes are phased out from September 30.
So far, he said, banks have collected more than 100 million pieces of old Sh1,000 notes out 217 million pieces that were in circulation when the demonetisation started. Advertisement
“We expect to collect more notes as the deadline nears because most people like doing things the last minute,” he said.
However, Dr Njoroge ruled out 100 per cent success of the demonetisation, saying some have “laundered the illicit proceeds in properties in the country and abroad.”
CBK caught the country by surprise on Madaraka Day when it announced that it was withdrawing the Sh1,000 notes in a bid to counter counterfeits, corruption and money laundering.
During demonetisation, individuals exchanging less than Sh1 million of the old notes and non-account holders were instructed to exchange them through the currency centres, CBK branches and commercial banks.
Bank customers and non-account holders having an excess of Sh5 million are required to get Central Bank’s approval.
The old generation Sh1,000 banknotes will be worthless papers from October 1, 2019.
CBK has said it is working with forex bureaus, payment service providers, money remittance providers, investigative agencies and other financial service providers to ensure all due procedures are followed.
Kenya is not the first country to walk down this path.
There have been at least five success stories in the currency change where the exercise worked for the economy and resulted in the intended outcomes.
These include Pakistan (2016), the UK (2002), Australia (1996), and the EU (2002).
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