Justice Wilfrida Okwany dismissed the petition by businessman Paul Kobia, saying he failed to show how the regulations were an infringement of his rights.
The prudential guidelines require any account holder to declare the source of the money being credited to the account and any withdrawals of more than Sh1 million.
The regulations are meant to prevent money laundering and hiding of illicit cash.
The High Court has declined to declare as unconstitutional sections of Central Bank of Kenya regulations that require banks to demand customers’ source of funds before crediting their accounts.
Justice Wilfrida Okwany dismissed the petition by businessman Paul Kobia, saying he failed to show how the regulations were an infringement of his rights.
The prudential guidelines require any account holder to declare the source of the money being credited to the account and any withdrawals of more than Sh1 million. The regulations are meant to prevent money laundering and hiding of illicit cash.
Mr Kobia argued it was illegal for banks to impose rules that make cash withdrawals difficult and which breach the confidentiality of financial transactions.
The rule, Mr Kobia reckons, should be applied when there is a complaint from agencies like the Ethics and Anti-Corruption Commission (EACC) as well as the Assets Recovery Agency.
Mr Kobia moved to court last year after Absa Bank wrote to him saying they were closing his account. He said that the reason for the closure was because of the unreasonable regulations.
He accused the CBK of having orchestrated a plan to adversely affect his business by preventing him from accessing millions of shillings from his business associates and partners globally.
His business, he said, demandd total confidentiality and that he had never been investigated for economic crimes relating to remittances of funds to his bank accounts.
Mr Kobia said developed countries such as Dubai, Singapore and Hong Kong do not demand documentary evidence before remitting cash to customers unless the accounts are under investigations for fraud or other crimes.
Lawyer Henry Kurauka, appearing for Mr Kobia, argued that the demand for documentary evidence would prevent many people from carrying out genuine economic transactions with his client.
Mr Kobia was last year charged with obtaining money by false pretence through a fake gold trading scheme.
The court heard that the businesman and 13 others conned one Italiana Antonio Cianci, who is a director of a Dubai-based company known as Iron & Steel DMCC that deals in buying and selling of gold.
The suspects allegedly lured Mr Cianci to a house on Riverside Drive, Nairobi while claiming that was where pure gold was available for sale.
Mr Cianci lost the said monies after being duped that he had bought genuine gold worth $1,198,000 (Sh130 million.)
But the CBK said Mr Kobia had not been stopped from accessing his funds or receiving remittances from his business partners and associates.
Further, the CBK argued that the petition did not meet the constitutional threshold, insisting there was no proof the regulations had affected Mr Kobia.
The court heard that the CBK is statutorily mandated to issue guidelines and regulations for financial institutions carrying out banking business and that the controversial businessman had not established that any of the guidelines had breached his rights to privacy or property.
“I find that the petitioner herein did not discharge the burden of proof so as to entitle him to the orders sought in the petition,” the judge said.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
