Kenyans who have interacted with digital platforms will no doubt agree that they have been handy especially in recent months with the near commercial bank freeze in lending to individuals.
Besides stepping in to serve a starved market, these platforms have infused speed and efficiency in cash transactions and payment for goods and services.
With their money sitting in a virtual account, millions of people can today purchase goods and services, access loans or remit money to friends and relatives with the click of a button.
Whereas this is remarkable, huge risks abound. As the Central Bank of Kenya has correctly diagnosed, transactions on these platforms are fraught with immense risks. First, there are weak controls, the lenders barely know their customers and neither are the sources of funds being transacted known. This is particularly an untenable situation in a world of rising terrorism threats and the digital connectedness that allows the black economy to pose a disruptive threat to the formal financial system.
This state of affairs demands that all those offering digital cash services strengthen theirKnow-Your-Customer (KYC) processes for account opening and before any transactions are done. In real sense, the level of threat that these digital platforms pose requires prompt response from the regulators not mere flagging of the problem without offering a solution.
At the very basic level, the country must find a way of enforcing the KYC rules on this thriving sector to help manage some of the obvious risks such as their use to launder money and finance criminal activities.
The regulators, including the Capital Markets Authority, the Insurance Regulatory Authority, the Retirement Benefits Authority and the Sacco Societies Regulatory Authority, must not allow this fledging business line to soil the image of Kenya’s financial system.
This kind of lethargy is not acceptable in a country that faces direct threats from active cells of the Al-Shabaab terrorist group as well as a thriving black economy as evidenced by the recent seizures of large consignments of contraband goods, including sugar. KYC is one of the required processes imposed on financial institutions and certain types of reporting entities under the anti-money laundering law and this must be enforced fully and at all times. That is what the law is meant to do.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
