Kenya: CBK - 99% of Accounts Hold Less Than Sh1 Million, Most Clients Willing to Comply With Rules
The Central Bank of Kenya says less than 1 per cent of accounts have more than Sh1 million and that most clients are willing to comply with rules to declare purposes of monies beyond set limits.
Governor Patrick Njoroge revealed this statistic when he appeared before the House Committee on Finance to respond to queries on the non-implementation of Section 33(C) of the Banking Act which required CBK to develop and submit regulations prescribing conditions on deposits and withdrawals for parliamentary approval within 30 days.
MPs have accused the governor of ignoring provisions of the law and instead resorted to using circulars and memos to regulate banking rather than through regulations that must be approved by the National Assembly. But Njoroge told the Legislators that the provision was 'not implementable' because it attempts to override other global requirements on deposits and withdrawals that may be set by banks for their customers in terms and conditions.
He denied claims by MPs that the prudential guidelines had inconvenienced people and businesses prompting some to avoid banking cash. "Most Kenyans willingly report on any transactions as per the regulation," he added. The CBK Governor explained the regulations were in line with global requirements to counter money laundering and terrorism financing.
He warned that weakening the requirements for cash deposits and withdrawals will have devastating economic consequences. "The Goldenberg scandal from our perspective is a good cautionary tale as we know it devastated the economy to the weakest we have ever been- GDP fell to the lowest in the entire history of our country, several banks collapsed, prices of essential commodities rose significantly and inflation hit a record high, finally the poor and vulnerable were hit the hardest as the price of commodities increased significantly."
"Dear Members, allowing illicit funds to flow back freely to the formal financial sector will have a comparable effect," he stated. Njoroge said if Kenya goes against global measures by doing away with Section 33(C), the country would be cut off from the international financial fabric. Read More from All Africa.
Source: All Africa