The Central Bank of Kenya (CBK) has issued a stern warning to individuals and businesses involved in money transfer services without the necessary licenses. The regulatory body has observed a concerning rise in cases involving entities operating payments and money remittance services without proper authorization.

A Criminal Offense: CBK's Declaration

In a statement, CBK made its position clear, emphasizing that the operation of money or value transfer services without a valid license or authorization from CBK is a criminal offense. This strong declaration serves as a cautionary measure against unauthorized money transfers.

The Peril of Unregulated Transactions: Kenyans at Risk

CBK has further alerted the public to the grave risks involved in such unregulated transactions. Notably, transactions conducted through unlicensed entities are not protected by the law. In other words, those engaging in unlicensed money transfer services risk losing their money without legal recourse.

CBK has underlined a way to distinguish legitimate payment service providers and money remittance providers. Licensed entities that comply with the regulations conspicuously display the CBK license or authorization in their business premises, providing transparency for the public.

Zero Tolerance for Illicit Money Transfers

Notably, CBK has taken a firm stance against illegal money transfers. The regulatory authority has made it clear that individuals found engaging in such activities will face prosecution. This stern measure is part of the CBK's commitment to safeguard the financial well-being of Kenyans.

In an effort to eliminate unlicensed money transfer operations in Kenya, CBK has sought the assistance of the public. Kenyan citizens are encouraged to report any instances of money transfer services being provided without the necessary documentation. This collaborative approach reinforces the importance of regulation in financial transactions.

Hawala Transactions: A Specific Warning

CBK has specifically warned Kenyans against engaging in money or value transfer services commonly referred to as Hawala, particularly when offered by unlicensed providers. Hawala is an informal method of transferring money without physical currency changing hands, often operating outside formal financial institutions.

The Hawala system, while commonly used between brokers in Kenya, raises concerns due to its lack of promissory notes and the heavy reliance on trust between the brokers. This anonymity in transactions has led to Hawala's association with money laundering, as the source of funds transferred through this method cannot be easily traced.

Accessing Legitimate Service Providers

To ensure the public has access to safe and licensed money remittance and payment services, CBK has made available a list of companies authorized to offer these services. This list is accessible on the official CBK website, ensuring that Kenyans can confidently choose licensed providers for their financial transactions.

The CBK's strong warning against unlicensed money transfer services serves as a vital reminder of the importance of financial regulation and transparency. By keeping an eye out for licensed providers and reporting unlicensed services, Kenyans can play a role in protecting their financial interests and supporting the integrity of the financial system in Kenya.