Cabinet approves plan to raise cash transfers reporting limit to Sh2m


The Cabinet has approved a proposed law that seeks to raise the threshold for reporting large cash transactions by banks to Sh2.12 million.

Photo credit: File | Nation Media Group

The Cabinet has approved a proposed law that seeks to raise the threshold for reporting large cash transactions by banks to Sh2.12 million ($15,000).

 The passage of the law would be a major win for cash-intensive businesses whose owners have lobbied for years for the limit to be raised.

Kenya is a signatory to the United Nations Security Council’s Anti-Money Laundering and Combating Financing of Terrorism Frameworks and a member of the Financial Action Task Force (FATF) that monitors countries in efforts to combat money laundering and terrorism financing.

Due to this, large cash transactions of $10,000 (Sh1.41 million) are currently to be reported by banks to the Financial Reporting Centre (FRC).

The Cabinet yesterday approved the draft Anti-Money Laundering and Combating of Terrorism Financing Laws (Amendment) Bill, 2023, which raises this threshold to $15,000.

“If enacted by Parliament, FRC, the anti-money laundering agency, will have the power to show the instances under which it might request for the revocation of a reporting institution’s license,” said the Cabinet.

Former President Uhuru Kenyatta had in October 2021 ordered banks to raise the reporting limit to Sh5 million, but the Central Bank of Kenya (CBK) ignored the call amid concerns that this would expose Kenya to economic sanctions.

Many cash-intensive firms such as construction companies had for long lobbied for the limit to be raised, arguing that it had restricted their capacity to transact huge volumes of cash on a daily basis.

Experts say that the current limit has made bank transactions more tedious and restricted cash flow in the economy.

However, some stakeholders believe that increasing the limit would open the door for politically connected individuals to freely transact using stolen cash.

“The Financial Reporting Centre (FRC) will now impose sanctions for violations of the proceeds of crime. The Bill further aligns the reporting requirement by making reporting institutions to report suspicious transactions promptly upon forming suspicion,” said the Cabinet.

The Bill also enhances the penalties for violations for cross-border currency declarations, aligning them with FATF standards, amends the Insurance Act to provide for the licensing of insurance companies, and provides for the requirement for companies to keep a register of beneficial owners.

The Cabinet also approved the introduction and accreditation of bridging courses. In this new move, which seeks to enhance access to quality university education, the Ministry of Education will develop guidelines to support the implementation of the courses.

It also gave a nod to the Tree Planting and Nurturing Programme in learning institutions across the country. Led by the ministries of Education and Environment, the initiative will be expected to contribute to the government’s tree planting and restoration programme to achieve 30 per cent tree cover by 2030.

Under the programme, tree nurseries will establish in more than 45,000 schools, engaging millions of learners and teachers to plant and nurture the trees.

The Climate Change (Amendment) Bill, also approved by Cabinet, signals the government’s commitment to strengthening its involvement in carbon markets. Kenya has been actively participating in carbon markets for over 20 years, contributing to sustainable development and technology transfer.

However, the absence of a legal framework has created regulatory uncertainty, hindering full market engagement. The Bill is expected to address these challenges by legislating on carbon markets, controlling and managing trading activities. It also aligns with international commitments under the Paris Agreement.

The acquisition of the defunct Kenya Petroleum Refineries Limited (KPRL) by Kenya Pipeline Company (KPC) was also given the nod. The facility is being utilised for fuel storage. It has 45 tanks with a total storage capacity of 484 million litres out of which 254 million litres is reserved for refined products while the remaining is reserved for crude oil.