Bulk electronic payments made through real-time bank transfers last year grew by double-digits for the time since 2015, latest official data shows, signalling progress in the war on dirty cash.
Transactions cleared and settled through the Kenya Electronic Payments and Settlement System and Real Time Gross Payment System (KEPSS/RTGS) increased to Sh32.52 trillion from Sh29.39 trillion in 2018.
This represents a jump of nearly Sh3.13 trillion, or 10.64 percent, in the 12-month period through December 2019 compared to the year before, according to the statistics released by the Central Bank of Kenya (CBK).
The CBK requires banks to strictly process and settle payments above Sh1 million through the real-time RTGS/ KEPSS system where cash reflects within four hours of getting instructions under guidelines enforced from October 2009.
The real-time payments enables the CBK to scrutinise and flag suspicious transactions that may be linked to money laundering or financing of terrorism.
Some shrewd traders can, however, avoid the regulatory scrutiny by splitting up bulky payments using other payment channels such as cheques where transactions are capped at Sh1 million and takes up to two days or through cash withdrawals in banking halls.
The value of cheques, cleared at the Automated Clearing House run by the Kenya Bankers Association (KBA), during January-November 2019 was largely flat — rising just 0.25 percent to Sh2.39 trillion.
Financial institutions are required to report suspect deals to the Financial Reporting Centre (FRC) — the agency operationalised in April 2012 and mandated to identify and combat money laundering and financing of terrorism.
CBK data shows traders settled an average of Sh2.71 trillion a month through RTGS/ KEPSS during the year, a modest increase from Sh2.45 trillion a year earlier, the data shows.
KBA in June 2018 enforced tougher self-regulating rules requiring withdrawing or depositing Sh10 million or more to apply to give a three-day written notice to the bank. They are required to explain why they can’t use RTGS.