Tanzanian government has suspended exchange of its currency with that of Kenya, as well as inflow of Kenyan currency to the country.
This follows the issuance of new bank notes by the Kenyan government meant to curb graft in the country and illicit cash flows.
In a special notice to banks, the Bank of Tanzania said that it has frozen Central Bank of Kenya’s (CBK) cash collection account with immediate effect.
“Given the gravity of illicit flows concerns raised by CBK, you are required to subject all flows from and into Republic of Kenya to enhanced due diligence,” read the notice in part.
“The Bank of Tanzania has been informed by the Central Bank of Kenya (CBK) of the issuance of the new series of bank notes effective 31st May 2019, with a view to combat illicit financial flows and counterfeits in the Republic of Kenya. Consequently, CBK has suspended currency conversions and repatriations of all Kenyan currency to restrict illicit flows into the Republic of Kenya, and will not accept Kenyan currency with immediate effect,” read the notice dated June 7.
Kenya, during Madaraka Day Celebrations on June 1, unveiled the new currency and announced that the current Ksh1000 would be rendered useless by October 1.
Kenya has however been having strained business ties with Tanzania, following numerous graft cases in the country, and it might be another reason the country saw it easy to suspend the cash exchange.