Cash Ban: People rush to swap Bank Notes
*ISLAMABAD - Last week a man walked into a Nairobi car yard and paid for a luxury Mercedes with a mountain of 1,000 shillings ($10/9 euros) banknotes, desperate to offload cash that within days would be worthless*.
With a deadline looming before the Central Bank of Kenya bans all old edition 1,000 shilling notes, big fish with their fortunes stashed in cash are under pressure to find ways to jettison their money.
A new print of the 1,000 shilling banknote, the largest denomination, was rolled out in June, with Kenyans given to September 30 to exchange their old bills at the bank or be stuck with bundles of useless cash.
The operation is aimed at flushing out dirty money being hoarded by tax evaders, crooked businessmen and criminal groups.
Large deposits of the old notes, embossed with the image of Kenya’s founding father Jomo Kenyatta, raise alarm bells at banks and require paperwork to prove their origin.
The central bank in June said there were roughly 218 million 1,000 shilling notes in circulation, but declined to say what proportion was being stashed as black money.
Kenyan economist Aly-Khan Satchu said devaluing these bills works by “taking its owners by surprise”.
“Four months is a short period of time when you want to launder big sums of money,” he said.
“People who have that money will definitely try to save what they can”.
So people are getting creative, devising schemes to quickly unload small amounts of their cash while avoiding detection by the authorities.
John, a car dealer in Nairobi, recalled his customer last week counting out thousands upon thousands of banknotes to purchase a luxury car worth $74,000 (67,000 euros).
“People want to get rid of their old notes, but they know very well that questions will be asked if they go put the money themselves in the bank,” said John, who declined to offer his real name due to the nature of his business. -APP/AFP