Speaking on Tuesday when he appeared before the Parliamentary Committee on Finance, Central Bank Governor, Patrick Njoroge said that the majority of Kenyans have less than Sh1 million in their bank accounts.
The CBK boss told the lawmakers that less than 0.7 per cent of bank accounts in Kenya have a balance of more than Sh1 million.
With the emergence of startups offering cheap and easily accessible mobile loans it is likely the majority of Kenyans have swapped bank accounts for the handy mobile devices for savings and quick money.
Dr Njoroge added that the banking regulations, that require full disclosure of cash transactions exceeding Sh1 million, as enshrined in Section 33c of Banking Laws are in line with the International Anti-money Laundering regulations.
Njoroge said the country risk being blacklisted and cut off from the international financial fabric if it goes against global measures by doing away with Section 33c.
''Consequences of doing away with anti-money laundering are harsh. Kenyan banks will be blacklisted in the international market with international banks operating in the country recalled. Kenya will be regarded as a safe haven for money laundering,'' Njoroge said.
The CBK Governor dismissed Parliament's claim that some aspects of the Banking Act that took effect on October 1 last year are illegal.
Njoroge said only the Central Bank has the mandate to determine transaction limits and that the amendment to the Act followed all procedures as required by law.
He further added that regulations capping bank transactions are but in the best interest of the country.
''We remain vulnerable to money laundering and terrorist financing due to our geographical location. We, therefore, have a task to ensure illicit financial flows are not happening via our financial institutions,'' said Njoroge.