Regulatory Alerts2022-11-21
Banking Circular Number 5 of 2022 - Additional Guidance on Large Cash Transactions
The Central Bank of Kenya (CBK) has provided additional guidance on large cash transactions to mitigate Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) risks. The new guidelines address concerns about the implementation of due diligence requirements under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), particularly for Medium, Small, and Micro Enterprises (MSMEs). Key points include: 1. CBK conducted a survey that found most cash transactions relate to amounts below Ksh. 1 million or USD 10,000 equivalent, emphasizing the need for standard treatment of large cash transactions across the banking sector. 2. Commercial banks, mortgage finance institutions, and microfinance banks should continue monitoring and reporting suspicious transactions to the Financial Reporting Centre (FRC), adhering to POCAMLA's requirements. 3. Banks can process transactions when customers fail to meet due diligence requirements for large cash transactions but must file Suspicious Transaction Reports (STRs) or Cash Transaction Reports (CTRs) as prescribed by law. 4. Institutions are encouraged to adopt technology and innovations to address pain points and enhance the customer experience while maintaining AML/CFT compliance. 5. The attached large cash transactions declaration form is suggested for adoption across the banking industry. 6. Banks must submit a report to CBK by January 31, 2023, detailing their implementation of these guidelines and improvements made in verifying and reporting large cash transactions.