Tanzania suspends conversion of Kenyan shilling…instructed to monitor its movement

The Bank of Tanzania has suspended conversion of Kenyan money to Tanzanian currency. In a statement dated Friday, June 7, the regulator said it was advised to freeze the exercise by Central Bank of Kenya (CBK) in a move to tame illicit cash flows.

This comes barely one week after CBK launched new currency where it also announced it will demonetize the old Kes1, 000 bank notes.

“The Bank of Tanzania has been informed by the Central Bank of Kenya (CBK) of the issuance of the new series of banknotes effective Friday, May 31, 2019, with a view to combat illicit financial flows and counterfeits into the Republic of Kenya. Consequently, CBK has suspended currency conversion and repatriation of all Kenyan currency to restrict illicit flows into the Republic of Kenya, and will not accept Kenyan currency with immediate effect,” reads in part a statement addressed to all Tanzanian Banks.

This therefore means those wishing to convert Kenyan money to Tanzanian tender can do it in Kenya. Tanzanian lenders have in this light been directed be keen of any transaction to or from Kenya to help net fraudsters.

Kenya’s Central Bank Governor Dr. Patrick Njoroge Thursday issued guidelines on how the old notes are to be withdrawn from circulation, ahead of the October deadline.

The Central Bank of Kenya (CBK) said the notes will be available in all commercial bank branches as some have already hit the streets.

According to CBK, the process to withdraw the Ksh1, 000 note from the economy has already began in line with the regulator’s declaration that it will cease to be legal tender on October 1.

“By Gazette Notice No. 4849 of May 31 2019, all the older 1,000 shillings banknotes shall be withdrawn and will cease to be legal tender on October 1, 2019. All other denominations are unaffected and will continue to circulate alongside the New Generation banknotes. The objective of this measure is to deal conclusively with the emerging concerns about illicit financial flows and counterfeits,” it read.

CBK also stated that Persons exchanging currency notes for amounts not exceeding Ksh.1 million of the withdrawn currency notes will exchange at their Commercial banks, CBK Branches and Currency Centres, or any nearest commercial bank.

“Bank customers exchanging currency notes for amounts Ksh.1 million to Ksh.5 million of the withdrawn currency notes will exchange at their respective commercial banks, under the normal procedures and requirements. Persons without bank accounts exchanging currency notes for amounts exceeding Ksh.1 million will require an endorsement from CBK. Persons exchanging currency notes for amounts exceeding Ksh.5 million (bulk exchange) will require an endorsement from CBK,” it reads.

The banking regulator is further engaging with Forex bureaus, payment service providers, money remittance providers, investigative agencies and other financial providers to ensure the adherence to regulations.