The Central of Kenya has directed the Bank of Tanzania to freeze exchange of Kenyan bank notes with immediate effect as it moves to combat illicit financial flows and counterfeits. Through a letter addressed to all financial institutions on Friday, the Tanzanian bank regulator said the Central Bank of Kenya had informed it of assurance of new series of banknotes starting May 31.
“With a view to combat illicit financial flows and counterfeits into the Republic of Kenya, the Bank of Tanzania has been advised to freeze CBK Currency Collection Account with immediate effect,’’ the memo read as reported by the Star.
With the latest development, anyone with old Kenyan notes either in Tanzania or Uganda will now have to carry them to Kenya to replace them for new ones subject to CBK's guidelines.
The announcement comes as a blow to perpetrators of illicit financial flows who may have sneaked huge amount of Kenyan currency into the neighbouring nations, hoping to launder it into local currencies.
Kenyan traders who want to exchange money to trade in Tanzania and Uganda will also be greatly inconvenienced.
On June 1st during its national Madaraka Day celebrations, Kenya unveiled new bank notes to the public and announced plans to phase out old generation Sh1000 notes by October 1.
