Bank Note Purge Aimed At Corrupt Businessmen

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Written By Mahmoud Sarvari

Kenya has become the latest country to try to sweep away corruption and crime by withdrawing large denomination bank notes at short notice.

President Uhuru Kenyatta has told savers that they must return any 1,000 shilling (£8) notes to banks by October 1 or lose the money.

A new set of bank notes will be phased in over the coming months as other denominations are replaced as well.

The 1,000 shilling note is Kenya’s largest denomination and  is equivalent to $10 in many African countries.

Patrick Njoroge, governor of Kenya’s central bank, has expressed “grave concern” over the notes being used on a black market and for “illicit financial flows in Kenya and other countries in the region”.

Illicit wealth worthless

Withdrawing the 1,000 shilling note is directly aimed at corrupt businessmen suspected of hoarding millions of shillings obtained from money-laundering, tax avoidance and organised crime.

Switching the notes renders much of the illicit wealth worthless as banks will demand identification from anyone trying to exchange large amounts of money before the deadline. Anyone exchanging more than 5 million shillings will need permission to switch their money into new notes from the central bank.

The Kenyan government is also taking action to stop the exchange of shillings outside the country’s borders.

The new note design has also triggered controversy.

The notes bear a statue depicting President Jomo Kenyatta, the country’s first president who led the nation to independence from the UK. The constitution bans any portrait of an individual.

Legal challenge

Many Kenyans see the design as a celebration of someone that they regard as a great leader, but others are less happy.

Human rights activist Okiya Omtatah is challenging the central bank in court over the design and has asked the bank for clarification of why Kenyatta appears on the note.

India has also recently withdrawn a set of bank notes to tackle corruption and money laundering and withdrawn high denomination notes.

The European Union has scrapped large denomination euro bank notes for the same reason and just released newly designed 100 and 200 euro notes.

The new Europa design incorporates security features, such as holograms in a bid to foil counterfeiters.