The Central Bank of Kenya (CBK) has warned Kenyans against money transfer services that are operating without authorization.
“This is to inform members of the public that it is a criminal offence to provide money or value transfer services without a license or authorization from the CBK,” the statement read in part.
The regulator has warned Kenyans they risk losing their money because such transactions are not covered by law.
“Licensed entities operate as payment service providers or money remittance providers and they conspicuously display the CBK license or authorization in their business premises, for ease of public reference,” CBK advised.
CBK also stated that those found engaging in illegal money transfers would be prosecuted.
“CBK has a duty to identify entities and persons providing unlicensed or authorized money or value transfer services and to have them prosecuted in a court of law,” CBK warned.
Members of the public were asked to report anyone engaging in money transfer services without the necessary documentation to assist in weeding out illegal businesses operating in Kenya.
“Members of the public are hereby requested to submit to CBK, information on the identities and physical locations of entities and persons providing money or value services without a license or authorization from CBK.
“The information may be submitted anonymously if the person reporting does not wish to disclose his or her identity,” added the authority.
Further, CBK highlighted a transfer service known as ‘Hawala’ which it noted Kenyans should be wary of.
Hawala is an informal method of transferring money without any physical money actually moving and is done outside commercial banks and other formal financial institutions.
The system is conducted in Kenya between brokers and is done without promissory notes as the system heavily relies on trust between the brokers.
Hawala is commonly associated with money laundering because it provides anonymity during transactions, making the source of money impossible to trace.