Somali Magazine – The Kenyan shilling has continued to experience growth challenges as the U.S. dollar appreciates daily, causing the shilling to stagger and lose its market value. Following the intensified illicit dollar trade, shilling has been surpassed by the dollar, hitting a historic low of 151.16 against the dollar.
The Central Bank of Kenya (CBK) has accelerated its effort to combat the illegal dollar trade by cautioning unlicensed dealers who offer value transfers in contravention of the Money Remittance Regulation 2012. The CBK regulations noted that firms that provide cash remittance services to those living abroad will be required to sell any hard currency amounts exceeding $100,000 only to commercial banks. This implies that the forex bureau can sell customers an amount not exceeding $100,000 (Sh15.1 million) per day.
The move was caused by the observation that firms have been participating in the wholesale foreign exchange market without complying with the various guidelines, standards, and codes that govern that segment, the central bank said.
However, the efforts to regulate the illegal foreign transactions have been a drop in the ocean, considering the shilling is still under sustained pressure from the dollar.
“This is to inform members of the public that it is a criminal offense to provide money or value transfer services without a license or authorization from the CBK.”
Cases of buying and selling dollars without proper records and channels of remittances have been on the rise in recent weeks, raising an alarm for the CBK, which vowed to monitor every transfer done by the exchanging markets.
Other cases include the hawala system, where money is transferred through a network of brokers known as hawalas who transfer cash for clients outside the conventional institutional framework.
CBK, however, issued another caution yesterday, requesting individuals and organizations to provide information concerning firms that offer monetary services without proper licensing from the Central Bank of Kenya.This is to
services such as ‘hawala’ from unlicensed service providers.”
“The CBK has a duty to identify entities and persons providing unlicensed or authorized money or value transfer services and to have them prosecuted in a court of law.”
Shilling has gradually declined this year against the dollar, with the Central Bank witnessing a surge in demand for the US dollar.
Kamau Thugge, the CBK Governor, informed the National Assembly Finance and National Planning Committee last week that the banking regulator issued a note to 10 commercial banks seeking clarification on the significant disparity in their currency spreads despite the implementation of interbank market reforms.