to nought the hard - fought gains. the amendment refers directly to cash transactions but has far - reaching implications. has cbk acted to implement the amendment? yes, cbk first saw the amendment after it had become effective, but embarked on understanding and implementing it. to be clear, cbk had not been made aware or otherwise consulted in formulating the amendments, so we had no lead time. the initial objective was to gather in one place all regulations concerning cash deposits and withdrawals. significant difficulties emerged right away, one of which is that the stipulated timelines were impossible – the existing regulations just could not be brought together, reviewed by the public, reviewed by the attorney general, then brought to parliament and then made effective all within 30 days. in fact, theoretically it takes a minimum of 90 days but in practice recent legislations have taken 11 / 2 years and more. in the circumstances we sought guidance from the attorney general. there have been further developments that i will come back to later in my presentation. why is it impossible to implement the amendment? what difficulties arise? the amendment requires bringing together a variety of requirements in the banking act and other laws on deposits and withdrawals. requirements set by banks for their customers, their terms and conditions, would also need to be wrapped in ( including atm limits, hours for accessing the bank ). pocamla also has requirements on cash transactions, and these will conflict with the amendment. similarly by treaty, kenya is subject to the resolutions of the un security council, including on aspects of cash transactions. the amendment would conflict with that. the amendment does not ensure the safety and soundness of bank transactions. in addition, it does not allow the needed flexibility even in cases of “ clear and present ” danger. can i describe kenya ’ s aml / cft framework? yes, i will, but we must first acknowledge that kenya remains vulnerable to risks from money laundering and the financing of terrorism, by virtue of its location, advanced financial sector, cash - based economy, and instances of the underlying crimes. to set the stage, i will first describe the tenets of an effective aml / cft framework. the framework is intended to protect the financial sector from abuse. an effective framework strengthens the sector ’ s integrity, and that illicit funds do not flow through the financial sector. the tenets of effective aml / cft include : kyc / customer due diligence measures ; monitoring of transactions ; report of

on the economy would be severe : the goldenberg scandal is a cautionary tale. despite the pronounced good intentions of the architects, the goldenberg scandal devastated the economy to the weakest it has ever been. as much as 25 percent of gdp was looted, gdp growth fell to its lowest in kenya ’ s history, inflation surged to an all - time record of 61. 5 percent in january 1994, treasury bill rates rose to a record 85 percent in july 1993, and the exchange rate depreciated by 142. 6 percent between december 1991 and december 1993. further, the banking sector weakened significantly and several banks collapsed. the poor and vulnerable persons were hit hard, as the price of essential commodities rose significantly. allowing illicit funds to move back freely will have comparable effects. hon. members, i am about to finish. as i mentioned earlier, these matters have been brought before the courts for determination. a petition was filed on november 30, 2018 ( high court of kenya at nairobi constitutional petition no. 426 of 2018 ) challenging section 65 of the finance act 2018 that introduced section 33 ( c ) of the banking act. the attorney general is the first respondent and the national assembly is the second respondent, while the central bank of kenya is the first interested party. the high court under its special constitutional jurisdiction under article 165 ( 2 ) ( d ) will determine the matter and give an interpretation. the various parties have filed their submissions and the matter is scheduled for hearing on march 29, 2019. we await a determination by the court. i thank you for your attention.