Unregistered mobile lenders to cease operation in Kenya by September

CBK granted powers to regulate digital lenders in Kenya

The Central Bank of Kenya (CBK) has set September 17, 2022, as the deadline to get rid of Digital Credit Providers (DCP) who won’t have been registered with the regulator.

CBK has already set a raft of measures to regulate the sector, saying owners of these mobile lenders will also be subjected to self-audit to tame money laundering in the country.

The move comes after President Uhuru Kenyatta signed the Central Bank Act 2021, in December that placed all digital lenders under CBK.

The Act’s main aim will be to help curb the already prevalent debt shaming, which some lenders use as a way to recover their debts.

The Act will enable the regulator to grant approval before digital lenders price their products and loans. CBK will also get power to revoke licenses of digital lenders who are not compliant with the rules that have been set.

Digital lenders who were previously unregulated will also be required to apply for a license within the next six months.

Some of the measures that have been put in place will require the owners of digital lending firms, as well as key stakeholders to go through a special vetting exercise.

The lenders will also be required to not only provide a tax compliance certificate, Credit Reference Bureau (CRB) report, a certificate of good conduct, but also give CBK access to documents that will provide them with information on the company’s strategy to combat with financing terrorism policies, breaching of private data and money laundering.

A provision of fund sources by digital lenders will also be a requirement, as well as the terms and conditions that will apply to an applicant should be made public to the regulator.

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