Kenya’s president on Wednesday asked the finance ministry to increase the threshold of suspicious cash transactions commercial banks are required to report by anti-money laundering laws to facilitate cash deals among small businesses.
Kenya passed anti-money laundering legislation in 2009 and enacted several regulations in the following years, including one that requires commercial banks to report all suspicious cash transactions above 1 million shillings ($9,000).
“Cash remains an important payments channel for medium, small and micro enterprises, representing 80% of all their transactions,” Uhuru Kenyatta said in an address to mark a national holiday.
The implementation of cash transactions requirements by banks has curbed the operations of the businesses, he said, adding that the rules had “to some extent inhibited their growth.”
He ordered the finance ministry to immediately raise the reporting threshold for both deposits and withdrawals, without saying what the new figure will be.
“The financial institutions will retain their reporting obligations,” Kenyatta said.
Local business people have complained that the requirement has hindered their ability to carry out smooth transactions.
Commercial banks started following the rules aggressively in recent years, after at least five of them were hit with heavy fines by regulators for being used to transact proceeds of crime in government-related procurement deals.
Other institutions, or their staff, have also been investigated for being used to funnel cash used by Somalia-based militants, to carry out attacks against civilians in Kenya.
$1 = 110.9500 Kenyan shillings Reporting by Duncan Miriri; Editing by Angus MacSwan