CENTRAL BANK OF KENYA
Address by
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Kenya School of Monetary Studies
Wednesday, November 14, 2012
Amb. Robert Godec, Embassy of the United States in Kenya;

Dr. Eliawony Kisanga; Executive Secretary; ESAAMLG;
Ms. Maria C. Stephens; Senior Technical Adviser; USAID;
Representatives of USAID and US Treasury;
Representatives of Central Banks present;
Distinguished Guests and Participants;
Ladies and Gentlemen:
Let me begin by extending a very warm welcome to all the workshop participants. To
the participants who are drawn from beyond our borders, it is my sincere hope that
your stay with us shall be enjoyable and that you will carry with you pleasant
memories of Kenya when you return to your respective countries.
Ladies and Gentlemen: This workshop is about the development of efficient and
cost effective payment systems. The workshop will offer the pertinent issues of
financial integrity which completes the architecture of financial inclusion. The
importance of financial inclusion is now critically clear. Indeed, there has been
mounting evidence that access to financial services is a tool to fight poverty
sustainably. Access to affordable and sustainable financial services enables the poor
to save and accumulate capital for investment. This is important for generating selfemployment opportunities, smooth consumption, reduce vulnerability to economic
shocks, raise productivity, obtain higher returns on investments and ultimately
improve the quality of their lives.
However, approximately 2.5 billion adults globally, representing over half of the
world’s adult population, have no access to formal financial services to increase their
incomes and improve their lives. Among them, 1.1 billion live on less than one dollar
a day. These numbers are a representation of the great demand and need for
increased access to income generating activities and to appropriate financial services
for the large un-banked populace across the globe. This is particularly true of
developing economies in Africa, Asia and Latin America where nearly 90% of the
world’s unbanked adults reside. The expansion of financial inclusion has thus
become a critical topic in development agendas for policy makers and regulators
globally, with considerable energy and resources having been devoted towards its
enhancement. The testament to this is the G20 Global Partnership for Financial
Inclusion (GPFI) where non-G20 members participate. The Central Bank of Kenya,
and indeed Kenya has been represented by the Governor. At this point therefore,
allow me to underscore the importance of emerging payment systems to promoting
financial inclusion agenda.

Ladies and Gentlemen: The rapid growth of the mobile phone-based money
transfer service in Kenya beginning with M-Pesa, in 2007 has been seen by many as
having produced a tectonic shift in Kenya’s financial landscape with a great impact
on financial inclusion. Indeed, the rapid adoption and use of mobile money transfer
services by some 70% of the adult population has suggested that there is huge
potential for the development of inclusive formal financial services through mobile
phones. Equally complementing this was banks integration with it and also payments
of goods functionality raising in acceptance and reception. Notably, the development
of innovative and easy-to-use payment systems by financial institutions and other
businesses such as mobile phone operators has helped to support rapid growth in ecommerce, in many cases providing consumers with more effective, convenient, and
secure ways to purchase an expanding variety of products.
Ladies and Gentlemen: We all know that in the business world, the customer is
King. In this regard, I wish to highlight at this point key issues that policy makers
may need to address to strengthen consumer confidence in new and emerging
payment systems and which may be categorized into five broad areas including:
clarity, transparency and completeness in information disclosure; variability in
regulatory and protection regimes; fraudulent, misleading and deceptive commercial
practices; dispute resolution and redress and security and inter-operability.
Ladies and Gentlemen: Any success in financial inclusion has to go hand in hand
with financial integrity. In this regard, the Central Bank of Kenya has continuously
sought to enhance the regulation and supervision of the financial system in order to
improve its integrity. Indeed, as part of our efforts in ensuring appropriate and
effective oversight, we first issued AML Guidelines in 2000. These Guidelines were
later revised in 2006 and are currently in the process of being reviewed to reflect the
prevailing international best practice and to align them with the Proceeds of Crime
and Anti-Money Laundering Act, 2009 (POCAMLA) as amended and the new Act
on combating terrorism financing.
It is true that over the last 2 years, the Central Bank has issued regular AML/CFT
guidelines to financial institutions to further support and enhance the
implementation of the Proceeds of Crime and Anti-Money Laundering Act
(POCAMLA), 2009. The guidelines have covered the operationalization of the AML
Act, Suspicious Transactions Reporting, and measures to be adopted by financial
institutions to combat the financing of terrorism. The Central Bank has also revised
the Forex Bureau Guidelines so as to align them with the AML Act and is currently
sharing with stakeholders the Hawala guidelines.
Ladies and Gentlemen: The creation of the Financial Reporting Centre early in
the year and the passing of the Anti-Terrorism Law is a clear signal of the Kenya

Government’s commitment in protecting the integrity of our country’s financial
system. In fact I wish to inform you that following the creation of the FRC, all
financial institutions in Kenya including banks, forex bureaus and mobile phone
financial service providers will be required to report all suspicious transactions to the
Financial Reporting Centre. I have expounded on these issues and updates
whenever I represent Kenya in FATF evaluation meetings. That is why in the current
standing, FATF has commended Kenya for its tremendous effort in AML/CFT Laws
enactment and how we are on implementation.
Ladies and Gentlemen: In conclusion, it is my hope, that this workshop will help
enhance our technical capacity on emerging payment systems as we share our own
country experiences on these systems. Let me also once again take this opportunity
to assure all of you of the Central Bank’s continued commitment, collaboration and
partnership in the development of robust and secure payment systems. But this is
where capacity is urgently needed and support by USAID and the US Treasury
arising from their experience is most welcome.
Finally, it is a pleasure and honour to now declare the Emerging Payment
Systems Technical Capacity Building Workshop officially open and wish you
fruitful deliberations.
Thank you.