Kenyan Banks to Enforce New Transaction Monitoring Standards to Combat Financial Crimes

Kenyan commercial banks are set to begin monitoring significant cash deposits and transfers, particularly those exceeding KES 1 million, following an October 2023 directive from the Central Bank of Kenya (CBK) to combat money laundering and terrorism financing. 

This directive requires the use of “purpose of payment” (PoP) transaction codes, a step that may accelerate the adoption of ISO 20022 standards for transparent financial transaction processing. Although CBK has not set a compliance deadline, the global implementation timeline is by the end of 2025.

NCBA, Kenya’s fourth-largest bank, recently informed customers of these new requirements, and other banks are expected to follow by introducing PoP codes for Real-Time Gross Settlement (RTGS) transactions. The Kenya Electronic Payments and Settlement System (KEPSS) processed KES 10.7 trillion ($82.3 billion) in RTGS transactions in Q1 2024, a slight decrease in volume but a 6% increase in value from the previous quarter.

PoP codes aim to enhance transparency and regulatory compliance, aligning with CBK and ISO 20022 standards. The initiative will also improve cross-border payment efficiency by standardizing transaction data formats globally. Non-compliance with these regulations could result in fines of up to $155,000 (KES 20 million).

Source: TechinAfrica