Members of parliament are fighting the law they passed on large cash transfer requiring full disclosure on cash transactions exceeding Sh1 million.
Kenya Bankers Association (KBA) in its reply to a case challenging section 65 of the Finance Act, 2018 claims the section was sneaked into the Bill and passed at the third reading without having gone through a public hearing.
The case was filed by a lobby – Wajibika Society.
The amendment of section 65 of the Act was done through clause 58A of the same Act, which then introduced section 36C of the Banking Act.
The contested section limits withdrawals and cash deposits to Sh1 million daily. If a bank customer has to transfer or deposit more than the amount, they are expected to explain where the money is being channelled to and how it was obtained.
Lenders are also required to alert authorities on suspicious transactions, a move that is meant to tame money laundering and terrorism financing.
But MPs have opposed the Central Bank of Kenya (CBK) regulations, claiming they have inconvenienced many, prompting some to avoid banking the cash.
They also say some of the banking regulations are illegal as they did not have Parliament’s approval as required by law.
KBA in its reply filed before Justice Weldon Korir, however, explains that failure by Parliament to give an ear to the lenders and banking industry players before enacting the law was unfair and resulted in an unconstitutional amendment.
“Failure by the second respondent (Parliament) to give the second interested party ( KBA) an opportunity to give its comments on the process of amendments was a breach of one of the tenents of the Constitution of public participation and a mandatory requirements of the lawmaking process,” the reply by KBA Chief Habil Olaka read in part. The bankers also faulted Parliament for allowing the amendment in a Finance Bill which deals with taxes and revenue-raising measures instead of introducing the same in the Banking Act.