President Kenyatta orders upward revision on reporting large cash transactions
President Uhuru Kenyatta has directed the National Treasury and related stakeholders to raise the threshold for the reporting of cash transactions with the Financial Reporting Centre (FRC) from the current Ksh.1 million.
This is as the President notes that the current reporting application has inhibited the growth of small and medium enterprises (SMEs) who are largely reliant on cash only transactions.
“The implementation of cash transaction requirements by banks has not been facilitative of the operations of micro-small and medium enterprises (MSMEs) and has to some extent inhited their growth,” President Kenyatta said on Wednesday.
According to President Kenyatta, cash remains an important channel for MSMEs representing 80 per cent of their financial transactions.
The upward revision is expected to cover both withdrawals and deposits made by customers.
Even so, financial instutions are expected to retain their reporting obligations with the FRC.
Banks are obligated to declare all cash transactions above Ksh.1 million ($10,000) with the FRC in accordance to provisions of the Proceeds of Anti-Money Laundering Act (POCAMLA) which was effected in 2010.
The requirement is seen as a pivotal pillar of implementing Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) controls by government.
Nevertheless, the Central Bank of Kenya (CBK) has previously come under sharp scrutiny over the requirement especially from Members of Parliament (MPs).
The CBK has been fighting a move to amend the requirement noting it would weaken the war against corruption, money laundering and terrorism financing.
According to President Kenyatta however, the government is still committed to the frameworks stipulated by POCAMLA Act.
In spite of pressure to review the requirement previously, the CBK has indicated the majority of Kenyans are willing to make the requisite disclosures.
At the same time, previous data from the reserve bank has indicated that less than one per cent of Kenyans hold over Ksh.1 million in their bank accounts.