CBK Warns Public Against ‘Hawala’ Money Transfer Services

November 7, 2023

The Central Bank of Kenya (CBK) has issued a warning to the public regarding the rise in illicit money transfer services, which include traditional methods like ‘Hawala.’ This system of money remittance involves the transfer of cash without maintaining any records of the parties involved in the transactions.

These unregulated services are gaining popularity among Kenyans living abroad. This trend is attributed to lower costs and concerns related to money laundering.

“It has come to the attention of the Central Bank of Kenya (CBK) that there are entities and persons providing money or value transfer services without the requisite license or authorization from the CBK. Money or value transfer services include payment services regulated under the National Payment System Act, 2011 and money remittance services regulated under Money Remittance Regulations, 2013,” Kenya’s central bank said in a statement on Monday.

This trend has resulted in a notable decrease of Sh2 billion in official remittance figures for September alone.

The proliferation of informal channels for remittances is attributed, in part, to increased transaction charges. On average, sending $199.90 from the US to Kenya incurs a cost of $11.14, as per World Bank data.

The Central Bank of Kenya (CBK) warned that individuals using these services lack legal protection and could face the risk of losing their money if the service providers default.

“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.”

According to CBK, authorized entities, functioning as payment service providers or money remittance providers, prominently showcase their CBK license or authorization in their business premises for public reference.

The comprehensive list of licensed money remittance providers and payment service providers is accessible on the CBK website at https://www.centralbank.go.ke/.

“This is to caution and/or warn members of the public against seeking money or value transfer services such as “hawala” from unlicensed service providers. The CBK has a duty to identify entities and persons providing unlicensed or unauthorized money or value transfer services and to have them prosecuted in a court of law,” said CBK.

The monetary authority at the same time called for public cooperation in identifying and reporting unlicensed entities. This joint effort aims to support the prosecution of offenders and mitigate the surge in unlawful fund transfers.

The information may be submitted anonymously if the person reporting does not wish to disclose his/her identity. The information should be submitted to:
Bank Supervision Department
Central Bank of Kenya
P. O. Box 60000, 00200
E-mail: [email protected]

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