Limit for revealing source of cash to be raised above Sh1m

President Uhuru Kenyatta wants the requirement for bank customers to disclose source, intended use and beneficiaries when depositing and withdrawing cash raised above Sh1 million.

Mr Kenyatta Wednesday directed the Treasury to engage stakeholders and come up with a higher threshold than the current $10,000 The cash limit, he said, has hurt growth of micro- and small-sized businesses which largely transact in cash.(Sh1.1 million) under regulation 31 of the Proceeds of Crime and Anti-Money Laundering Regulations 2013.

The cash limit, he said, has hurt growth of micro- and small-sized businesses which largely transact in cash.

“It should also be recognised that the implementation of the framework by banks has been onerous for Micro, Small and Medium Enterprises (MSMEs),” he said in his televised address to the nation to mark his last Mashujaa Day celebrations as president.

“Cash still remains an important payments channel for MSMEs, representing 80 percent of all their financial transactions. The implementation of cash transactions requirements by banks has not been facilitative of the operations of MSMEs and has to some extent inhibited their growth.”

The law requires financial institutions to keep records of cash transactions of more than Sh1 million and report suspicious deals to the Financial Reporting Centre (FRC) – the agency tasked with identifying and combating money laundering and financing of terrorism.

Businesses and individuals transacting more than Sh1 million are required to declare to their bankers why the money cannot be deposited or withdrawn through electronic means — Kenya Electronic Payments and Settlement System and Real Time Gross Payment System.

The disclosures are part of global practice aimed at ridding financial systems of dirty cash.

“The transformation of our economy and the emergence of our nation as a financial hub is as a result of the efficiency secured by technology,”Mr Kenyatta said.

“The gains we have made in the digitalisation of financial processes and transactions have made it possible for us to better track and trace illicit flows of money.”

The proposal comes at a time FRC is looking to add more businesses and professions to the list of entities with reporting obligations, including lawyers, second-hand car dealers and trusts holding assets for wealthy people.

“I hereby order the National Treasury, after consultations with other stakeholders, to immediately cause the upward revision of the cash transactions reporting threshold from the current mark of Sh1 million applicable to both withdrawals and deposits by customers. The financial institutions will retain their reporting obligations to the Financial Reporting Centre,” said Mr Kenyatta.