The Central Bank of Kenya now wants all banks to strictly adhere to Anti-Money Laundering act of 2009 and subsequent regulations 12 and 31 of the Proceeds of Crime of AML instituted in 2013 even as the demonetization order takes shape.
In a Tuesday letter wired to CEOs of commercial banks, CBK asks they ensure the strict measures are followed when accepting old Sh1,000 notes to avoid money laundering.
The latest emphasis by CBK will see all banks establish the true identity of a person transacting the money besides obtaining the necessary identifications documents of the person involved in the transaction.
To tighten the strand further, banks will seek to know the source and the purpose of the funds in adherence with the directive.
The AML Act 2009 requires financial institutions to maintain records of all transactions carried out by their clients.
As stated by CBK Governor Dr. Patrick Njoroge in the first week of June, persons exchanging currency notes not more than Sh. 1 million of the withdrawn currency notes will exchange at their commercial banks, CBK branches or their nearest bank.
Those seeking to exchange currency notes ranging from Sh. 1 million to Sh. 5 million of the exiting currency will do so at their commercial banks under the normal procedures and requirements.
However, all persons without bank accounts but in need to exchange new currency above Sh 1 million are required to have an endorsement from CBK.
Equally, persons who want to exchange the new currency notes more than Sh5 million are also required to have an endorsement from the CBK.
All Sh 1,000 notes on the previous currency will be invalid by October 1.