Five Tough Rules That have Made It Hard To exchange Ksh 1000 Notes

One of the dramatic and historic actions taken by the ruling Jubilee party whose chairman is President Kenyatta was the withdrawal of all high-value banknotes from circulation by October. The move according to inside sources is meant to deal conclusively with the emergence of counterfeits that have in recent times jeopardised proper transactions and the conduct of commerce in our Kenyan currency.

The central bank of Kenya governor declared that the government has withdrawn the Sh1,000 series and through a Gazette Notice dated May 31, 2019, all persons have until October 1, 2019, to exchange those notes, after which the older Sh1,000 will cease to be legal tender.

The recent move by the government is meant to target illegal wealth held outside the formal economy, which has fuelled corruption and other illegal activities and has not been declared for tax purposes.

It is assumed that those with large amounts of such cash will now find it difficult to exchange for legal tender.

Tough rules


Another aim of the policy is to improve Kenya’s poor record on tax collection.

The idea is that if more transactions are carried out digitally and in the open, it would be easier to enforce tax payments.

The tough rules that have made it harder for people to clean illicit money include the requirement for bank customers to give a three-day notice to make over the counter transactions of more than Sh10 million, complete with supporting documents such as the source of the money, the purpose for withdrawing funds, the reason real-time gross settlement cannot be used and national identity cards/passport copies of the people involved in the transactions.

The guidelines also require the approval of the branch manager for cash transactions of Sh1 million to Sh10 million or the equivalent while cash transactions of Sh10 million to Sh20 million or the equivalent would require the approval of the regional branch manager or the senior manager.

This has made banks no-go zones for unsophisticated money launderers and those hoarding proceeds of corruption, forcing them to keep the money in their homes or offices.

The bigger issue

“The fight against corruption and malicious siphoning of public resources, at the national and county levels will not stop until our house have been swept clean. Kenyans want to see the product of investigations and prosecutions. Money must be recovered and culprits must vacate their positions and serve jail terms,” President Uhuru Kenyatta said on Saturday.

Top government officials, politicians and well-connected business operatives alleged to hold billions of shillings in cash will be forced to surrender the cash in exchange for the new banknotes.

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