Bank customers are now required to declare names of beneficiaries of cash withdrawals above Sh1 million and justify why such large transactions cannot be done using electronic transfer channels. This is according to additional prudential guidelines issued to all banks by the Central Bank of Kenya (CBK) in a circular dated 5th January 2016.
The new guidelines, which took effect immediately, require that all bank customers making cash (over the counter) transactions of USD 10,000 and above or its equivalent in any currency to fill a Large Cash Transaction Declaration form declaring:
- The source of the money being deposited or withdrawn over the counter
- Why the large cash deposit or withdrawal is necessary
- Why the cash deposit or withdrawal cannot be made through electronic means
- Where the money will be taken right from the bank premises
- What the money is going to be used for
- The full identity of the direct or indirect beneficiaries of the money
The introduction of this new regulation aims to reduce the risks associated with cash transactions and encourage the use of electronic payments which are a more secure alternative channel to process payments.
They are also meant to fight flow of graft funds—usually transmitted in cash to avoid tracing and evade tax – through the banking and micro-banking system.
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