1. to formulate a comprehensive memorandum of understanding between bss and cbk ; 2. to map out capacity building requirements for bss and support to be provided by cbk to enhance operations at bss ; bis central bankers ’ speeches 3. to review and finalize a balance sheet for bss ; 4. to fast - track the opening and operationalization of reciprocal accounts at both bss and cbk to facilitate trade between the two countries and solve the supply constraints of dollars in the market in south sudan ; 5. to formulate a method of determining the bilateral exchange rate ; 6. to propose instruments to enhance government borrowing and facilitate the deepening of the financial markets in south sudan ; and 7. to propose a comprehensive budget for the tc. i am informed that the tc held its 1st meeting from 4th to 6th december, 2012 in juba and that you have been holding the 2nd tc meeting in this same venue over the last two days. governor kornelio and myself look forward to the tc ’ s report on the progress made on the tasks identified. in this particular meeting, we need to make tangible progress and produce meaningful results that the market participants and governments on both sides are waiting for. i am pleased to hear that the memorandum of understanding has been finalized and reviewed by the legal counsels of the two central banks, who are present here with us today. before we give the chance to the tc for the presentation, i want to invite governor kornelio to make a few remarks. thank you. bis central bankers ’ speeches

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