The Central Bank of Kenya (CBK) has declared 7,386,000 pieces of the Ksh1000 old currency banknotes, that were not exchanged by the September 30 deadline, worthless pieces of paper.
In a statement on Wednesday, CBK Governor Patrick Njoroge noted that the monetary authority collected 209,661,000 pieces of the old Sh1,000 notes (Ksh209 billion) by the end of the deadline.
He noted that as at June 1, there were 217,047,000 pieces of the old Ksh1,000 banknotes in circulation, meaning CBK locked out Ksh7.3 billion in the old Ksh1000 notes phase-out.
“This means Ksh7,386,000,000 became worthless pieces of paper, ” said Njoroge.
He pointed out that during the demonetisation, a total of 3,172 suspicious transactions were flagged and are now under investigations by crime busters.
CBK also conducted 15 targeted inspections on banks that it suspected of not strictly following its stringent anti-money laundering procedures.
According to Njoroge, during the exercise that was meant to deal with illicit financial flaws, didn’t have an impact on the inflation rate nor exchange rate.
“There was no queue of buyers of high-value assets to launder money – AML/ CFT measures were applied on the forex market, thus no impact on the exchange rate,” said Njoroge.
He added, “demonetisation has been successful because we have completed it smoothly, with AML/CFT filters firmly in place, and kept out money whose owners did not want to be subjected to the relevant checks in the system.”
Following the completion of the exercise, the CBK governor also explained the process through which the old notes will be destroyed.
He said that if you put all the 217 million pieces of the Ksh1,000 notes, they would fit in only five 40-ft containers.
“When we receive banknotes, we punch them and shred them, then compact them into a briquette. Each briquette the Governor is holding is equivalent to Ksh1,000,000 in shredded banknotes,” he said.
The old Ksh1000 notes have been replaced by the new generation notes that were launched in June during the Madaraka fete in Narok County.
During the event, Njoroge, however, said the old Ksh50, Ksh100, Ksh200 and Ksh500 notes will be gradually phased out.