The lenders will be required to provide the information when applying for licences in the proposed regulations that will come into force before next April when the CBK starts regulating digital lending firms.
Central Bank governor Patrick Njoroge has repeatedly warned that digital lenders could be used to launder illicit cash under the guise of offering cheap and easily accessible credit to Kenyans.
Digital lenders will from next year be required to disclose the source of funds and show proof of their anti-money laundering systems as the Central bank of Kenya (CBK) moves to curb the use of the platforms to clean dirty cash.
The lenders will be required to provide the information when applying for licences in the proposed regulations that will come into force before next April when the CBK starts regulating digital lending firms.
Central Bank governor Patrick Njoroge has repeatedly warned that digital lenders could be used to launder illicit cash under the guise of offering cheap and easily accessible credit to Kenyans.
Money laundering, which involves transferring and disguising illegally obtained cash to make it look legitimate, is mostly used by criminals and the corrupt to clean their wealth.
“An application [for a licence] shall be submitted together with…the proposed digital credit provider’s anti-money laundering and combating the financing of terrorism policies and procedures and description and evidence of sources of funds to be invested in the digital credit provider,” read the proposed regulations.
The law previously did not require digital lenders to disclose the source of their funds, making it a convenient avenue to clean dirty cash through tens of the unregulated micro-lenders, which have flooded the market to offer credit.
The lenders will also be compelled to disclose the names of their top shareholders in addition to having a physical office locally. Their executives will also be vetted by the CBK to ensure they meet the fit and proper criteria, similar to the one done on bank executives.
“The CBK may direct a significant shareholder who is deemed as not fulfilling the fit and proper criteria to dispose of all of his shares in a digital credit provider within such period as the CBK may direct,” said the CBK.
The amendment that brings digital lenders under the watch of the Central Bank of Kenya was signed into law earlier this month.
