Bungoma Divisional Criminal Investigation Officer (DCIO) Joseph Kahindi was on Tuesday arrested with ksh4 million fake currency in Busia town.
Kahindi was arrested alongside two junior officers following a tip-off from locals.
During the operation, the police recovered 415 pieces of 100 US Dollars and Ksh2000 from the DCIO’s pockets.
The junior officers told the police that Kahindi had asked them to accompany them to Busia and that they knew little about his mission.
The three were later released on Wednesday morning after intense grilling.
Following the incident, the Director of Criminal Investigations George Kinoti told a local media that a team of investigators from Nairobi had been dispatched to Busia to probe the matter.
Kahindi has since been directed to hand over to his deputy pending investigations.
The incident comes amid reports of increased circulation of fake currency in the country just days to the September 31 deadline.
Last week a 33-year-old man was arrested with Ksh2.7 million in Mwea East.
Detectives also confiscated assorted bottles of chemicals believed to be used in processing the fake old Ksh1000 currency notes.
In the same week, DCI detectives seized over Ksh200 million in fake United States Dollars, Euros and Pounds in Kileleshwa, Nairobi.