Kenya’s banking regulator’s plan to curb fraud and money laundering
New generation bank notes unveiled are to replace the current one thousand notes, in a move that is aimed at curbing trending economic vices
Beginning October 31st this year, Kenyans will start using new generation notes, replacing the old one thousand shillings that had images of former heads of state.
The statement was issued by Central Bank of Kenya Governor Dr. Patrick Njoroge during the Madaraka Day celebration on 1st June at Narok Stadium, officiated by President Uhuru Kenyatta.
According to the Governor, the move is aimed at curbing fraud and money laundering. The notes, he said, have a unique theme and security features and will have various images including the iconic Kenyatta International Convention Centre (KICC) and the big five wildlife. They will also be easy to use by the visually impaired.
“The new banknotes bear significant aspects of our nation and like the coins, will serve as a means of passing knowledge, conserving culture and promoting our global uniqueness,” Dr Njoroge said, adding:
“Each banknote has a unique theme to show the richness of our people and nature in our beautiful country Kenya. For the Sh50 note we have green energy, Sh100 agriculture, Sh200 social services, Sh500 tourism and Sh1000 governance.”
The old Sh1000-note will be withdrawn effective October 1, when they will cease to be legal tender.
“All the older 1000-shillings series shall be withdrawn. By a Gazette notice dated May 31, 2019, all persons have until October 1, 2019 to exchange those notes after which the older 1000 shillings banknotes will cease to be legal tender. More details about this will be provided,” the Governor said, then handed over the brand new notes to President Kenyatta.
He further raised concern over emergence of counterfeits, which he said, jeopardize proper transactions and the conduct of commerce in Kenyan currency, the main reason the banking regulator came up with the new generation notes.
“We have assessed the grave concern that our large banknotes particularly the older Sh1000 shillings series. They are being used for illicit financial flaws in Kenya and even other countries in the region. We will conduct an awareness program to sensitize Kenyans on the new notes which are already in circulation,” Dr Njoroge said, adding that the new banknotes will circulate alongside those already issued but not withdrawn.
In 2012, CBK sought a new image for the local currency notes and coins, in adherence to the constitution. Article 231(4) of the constitution bars the use of portraits or images of individuals on the currency, stating that notes and coins should only bear images that depict or symbolize an aspect of Kenya.
The new currency notes are expected to help Kenya in the war against corruption. According to a statement from CBK, countless times people have been caught with huge money sums in their homes that are presumed to be obtained through unscrupulous means. Public funds have been reported to be looted in several scenarios. The CBK governor noted that there is a lot of illicit money in circulation.
Hence, the new notes have been designed with unique features to ease the detection of counterfeits. The new currency has also been made in a way that will be easily recognized even by those visually impaired.
However, its role in curbing corruption and allied economic crimes is what has attracted widespread attention. Following hot on the heels of the announcement of the rollout of the new currency, Director of Criminal Investigations George Kinoti and the Director of Public Prosecution Noordin Hajji solicited the help of the US’ Federal Investigations Bureau to help Kenya in the war against graft.
United Kingdom would also later report that it had sent special investigators into the country to help Kenyan authorities track past and present politicians who have stashed billions of shillings in the UK and its jurisdictions.
UK’s main focus would be to provide forensic evidence and concrete money trails that would lead local detectives towards stashes of cash and assets purchased from illegal proceeds.
“We are working hard. We know corruption is pushing back. Money that has been stolen and stacked in international accounts must be recovered and the culprits must be prosecuted,” British High Commissioner for Kenya, Nic Hailey, was quoted saying, adding:
“I have spoken with the Treasury. We are keen on those who want to change Kenyan notes into sterling.
While such efforts continue to gather steam, the new currency appears to have opened up some new controversy and criticism with aides from the economic front as well as the general public casting doubts on them, citing that it will be adopted by the corrupt riding on the new currency.
A section of the public and lawmakers have also faulted CBK for attempting to demonetize the current legal tender. They say the inclusion of the image of Kenya’s first President Jomo Kenyatta on the new notes ‘violates the law.’
Additionally, East African Legislative Assembly (EALA) Member of Parliament Simon Mbugua has filed a case seeking the removal of Central Bank of Kenya Governor Patrick Njoroge for allegedly flouting the law in regards to the new bank notes.
In his petition, coming barely two days after the new currency announcement, the legislator says he wants the circulation of the new notes stopped.
He cites lack of public participation as provided in the Constitution by declaring October 1 as the day when the old generation series of Sh1, 000 will phase out.
He also sought the court interpretation over the CBK decision to replace the old generation 1,000 notes with new ones that bear a statue of Kenya’s first President, the late President Jomo Kenyatta.
This, the legislator explains contravenes provisions of Article 234 (4) of the Constitution which provides that the Kenyan currency should only bear images that depict or symbolize Kenya or an aspect of Kenya but shall not bear a portrait of any individual. This argument is in tandem with that shared by activist Okiya Omtata, who has also filed a petition in court challenging rollout of the new currencies.
It remains to be seen the implication these new currencies will have in the economy, now that they’ve already been produced for circulation.