National Payment System Act

Section 1. Short title Section This Act may be cited as the National Payment System Act.

Section 2. Interpretation Section In this Act, unless the context otherwise requires— "bank" has the meaning assigned to it in the Banking Act ( Cap. 488 ); “beneficial owner" has the meaning assigned to it under the Companies Act ( Cap. 486 ); "business day" me ans any day, other than a Sunday, a public holiday declared in accordance with the Public Holidays Act ( Cap. 110 ), a day declared to be a bank holiday under the Banking Act ( Cap. 488 ), or a day declared to be a bank holiday under the Microfinance Act ( Cap. 493C ), on which the institutions and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") are open to the public for carrying on business functions; "Cabinet Secretary" means the Cabinet Secretary for the time being responsible for matters relating to finance; "Central Bank" means the Central Bank of Kenya established under the Central Bank of Kenya Act ( Cap. 491 ); "Central Bank of Kenya settlement system" means a settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") established and operated by, or under the control of, the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") ; "Central Bank of Kenya settlement system participant" means— (a) the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") ; (b) a bank , an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") or a branch of a foreign institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") ; or (c) a designated payment system operator ("an operator of a designated payment system;") , that participates in the Central Bank of Kenya settlement system ("a settlement system established and operated by, or under the control of, the Central Bank;") . "clear" means the exchange of payment instructions, and "clearing" shall be construed accordingly; "clearing, netting and settlement agreements" means written agreements with regard to clearing, netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") or settlement ("discharge of settlement obligations;") concluded between the Central Bank of Kenya settlement system ("a settlement system established and operated by, or under the control of, the Central Bank;") participants or settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants; "designated payment instrument" means a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") designated in accordance with section 6 ; "designated payment system" means a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") designated in accordance with section 3 ; "designated payment system operator" means an operator of a designated payment system ("a payment system designated in accordance with;") ; "designated payment system participant" means a person ("any legal entity including a trust;") who is— (a) a participant in a designated payment system ("a payment system designated in accordance with;") ; or (b) a designated payment system operator ("an operator of a designated payment system;") ; "failure to settle" means the inability of a settlement system participant to meet its settlement ("discharge of settlement obligations;") obligations in a clearing house; "institution" means a bank , mortgage finance company or a financial institution as defined in the Banking Act ( Cap. 488 ) or a microfinance bank business as defined in the Microfinance Act ( Cap. 493C ) or any other body which the Cabinet Secretary ("the Cabinet Secretary for the time being responsible for matters relating to finance;") may, in consultation with the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , declare, by notice in the Gazette , to be an institution for the purposes of this Act; "netting" means the determination of the net payment obligations between two or more settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants within a payment clearing house ("an arrangement between two or more Central Bank settlement system participants, excluding a designated payment system operator, governing the clearing of payment instructions between those Central Bank settlement system participants;") or the determination of the net settlement ("discharge of settlement obligations;") obligations between two or more settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants within a settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") ; "payment clearing house" means an arrangement between two or more Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants, excluding a designated payment system operator ("an operator of a designated payment system;") , governing the clearing of payment instructions between those Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants; "payment clearing house system operator" means a person ("any legal entity including a trust;") , other than a designated payment system operator ("an operator of a designated payment system;") , who clears on behalf of any two or more Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants; "payment instrument" means any instrument, whether tangible or intangible, that enables a person ("any legal entity including a trust;") to obtain money, goods or services, or to otherwise make payment; "payment instruction" means an instruction to a settlement system participant to transfer funds or make a payment; "payment obligation" means an indebtedness that is owed by one settlement system participant to another as a result of the clearing of one or more payment instructions; "payment service provider" means— (i) a person ("any legal entity including a trust;") , company or organisation acting as provider in relation to sending, receiving, storing or processing of payments or the provision of other services in relation to payment services through any electronic system; (ii) a person ("any legal entity including a trust;") , company or organisation which owns, possesses, operates, manages or controls a public switched network for the provision of payment services; or (iii) any other person ("any legal entity including a trust;") , company or organization that processes or stores data on behalf of such payment service providers or users of such payment services; "payment system" means a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system; "payment system management body" means a body recognized by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") in accordance with section 7 ; "person" includes any legal entity including a trust; "settlement" means discharge of settlement obligations; "settlement instruction" means an instruction given to a settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") by a settlement system participant or by a payment clearing house system operator ("a person, other than a designated payment system operator, who clears on behalf of any two or more Central Bank settlement system participants;") on behalf of a Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant to effect settlement ("discharge of settlement obligations;") of one or more payment obligations, or to discharge any other obligation of one system participant to another system participant; "settlement obligation" means an indebtedness that is owed by one settlement system participant to another as a result of one or more settlement ("discharge of settlement obligations;") instructions; “significant shareholder” has the meaning assigned to it under the Banking Act ( Cap. 488 ); "system operator" means a person ("any legal entity including a trust;") , other than a designated payment system operator ("an operator of a designated payment system;") , authorized in terms of section 8 (2)(c) to provide services to any two or more persons in respect of payment instructions; "settlement system" means a system established and operated by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") for the discharge of payment or settlement ("discharge of settlement obligations;") obligations, or the discharge of payment and settlement ("discharge of settlement obligations;") obligations, between system participants in that system; "settlement system participant" means— (a) a Central Bank of Kenya settlement system participant ; or (b) a designated payment system participant ; and "systemic risk" means the risk that failure of one or more settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants, for whatever reason, to meet their payment obligations or their settlement ("discharge of settlement obligations;") obligations may result in any or all of the other settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants being unable to meet their respective payment or settlement ("discharge of settlement obligations;") obligations. [Act No. 41 of 2013 , Sch, Act No. 19 of 2015 , s. 167.]

Section 3. Designation of apayment system Section 3(1)(a) the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") poses systemic risk ("the risk that failure of one or more settlement system participants, for whatever reason, to meet their payment obligations or their settlement obligations may result in any or all of the other settlement system participants being unable to meet their respective payment or settlement obligations") ; Section 3(1)(b) the designation is necessary to protect the interest of the public; or Section 3(1)(c) such designation is in the interest of the integrity of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") . Section 3(2)(a) the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") that is the subject of the designation; Section 3(2)(b) the operator of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") that is the subject of the designation; and Section 3(2)(c) any terms and conditions to which the designation may be subject. Section 3(3) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall give a written notice of designation of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") to the operator of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") that is the subject of designation. Section 3(4)(a) amending or revoking any condition to which the designation may be subject; or Section 3(4)(b) making the designation subject to a new condition or conditions. Section 3(5)(a) failure by the designated payment system ("a payment system designated in accordance with;") to comply with any condition to which the designation may be subject; Section 3(5)(b) whether or not the designated payment system ("a payment system designated in accordance with;") has ceased to operate; Section 3(5)(c) whether or not the designated payment system operator ("an operator of a designated payment system;") has knowingly furnished information or documents which are false or misleading in any material respect to the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") in connection with the designation of the system; Section 3(5)(d) whether or not it is in the public interest to revoke the designation; Section 3(5)(e) any other matter that the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may deem appropriate. Section 3(6)(a) have retroactive effect; Section 3(6)(b) affect the validity or enforceability of the rules of the designated payment system ("a payment system designated in accordance with;") , nor shall it affect any payment to or out of the account of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") participant or netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") or settlement ("discharge of settlement obligations;") that took place, prior to the coming into effect of such revocation or variation. Section 3(7) Revocation of designation of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or variation of conditions thereof, if any, shall be by notice in the Gazette , and advice thereof shall be given in writing to the designated payment system operator ("an operator of a designated payment system;") . Section 3(8) Without prejudice to Section 32 (1), an operator of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") shall, upon advice by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") to that effect, and within such period as the Bank may prescribe, apply for the designation of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") under this Act. Section 3(9)(a) fails or refuses to apply for designation of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") in accordance with the advice; and Section 3(9)(b) continues to operate a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") that has not been designated under this Act commits an offence.

Section 4. Amendment to constitution and rules ofdesignated payment system Section No amendment to the constitution of any designated payment system ("a payment system designated in accordance with;") , or to the rules governing the system, shall have effect until they have been approved by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") .

Section 5. Inspection of constitution and rules ofdesignated payment system Section the offices of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") ; and

Section 6. Designation ofpayment instrument Section 6(1)(a) the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") is of widespread use as a means of making payment and may affect the payment systems of Kenya; Section 6(1)(b) the designation is necessary to protect the interests of the public; or Section 6(1)(c) such designation is in the interest of the integrity of the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") . Section 6(2)(a) the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") that is the subject of the designation; Section 6(2)(b) the issuer of the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") that is the subject of the designation; and Section 6(2)(c) any terms and conditions to which the designation may be subject. Section 6(3) Where a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") has been gazetted for designation, pursuant to subsection (1) and (2), the issuer of that payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") shall comply with such requirements as the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may specify. Section 6(4) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall give a written notice of designation of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") to the issuer of the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") that has been designated pursuant to section 6 (1). Section 6(5)(a) contravened any of the provisions of this Act or regulations made thereunder; Section 6(5)(b) contravened any restriction or condition to which the designation is subject; Section 6(5)(c) failed to comply with any regulations, guidelines, circulars, notices or standards issued by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") under this Act; Section 6(5)(d) made a false, incorrect or misleading statement in the documents or information submitted under subsection (3); Section 6(5)(e) ceased issuing the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") for a continuous period of six months; Section 6(5)(f) goes into liquidation or is wound up or is otherwise dissolved; Section 6(5)(g) it is in the public interest to vary or revoke the designation; Section 6(5)(h) there exists any other ground which in the opinion of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") warrants variation or revocation. Section 6(6) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, before making a decision to revoke the designation under subsection (5), offer the issuer of a designated payment instrument ("a payment instrument designated in accordance with;") a reasonable opportunity to make representations. Section 6(7) The revocation of a designation or the variation of conditions to which a designation is subject shall not have retroactive effect. Section 6(8) Revocation of designation of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") or variation of conditions thereof, if any, shall be by notice in the Gazette , and written advice thereof shall be given to the designated payment instrument ("a payment instrument designated in accordance with;") issuer. Section 6(9) Without prejudice to section 32 (1), an issuer of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") shall, upon written advice from the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") to that effect, and within such period as the Bank may prescribe, apply for the designation of the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") under this Act. Section 6(10)(a) fails or refuses to apply for designation of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") in accordance with the advice commits an offence and is liable, on conviction, to a fine not exceeding one million shillings, or to imprisonment for a term not exceeding five years, or both; and Section 6(10)(b) continues to issue a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") that has not been designated under this Act, commits an offence and is liable to a fine not exceeding five hundred thousand shillings or to imprisonment for a term not exceeding three years, or both.

Section 10. Clearing provisions Section 10(1)(a) a Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant ; or Section 10(1)(b) a bank , an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") or a branch of a foreign institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") that is allowed to clear ("the exchange of payment instructions, and "clearing" shall be construed accordingly;") in terms of section 8 (2)(d)(i). Section 10(2) A person ("any legal entity including a trust;") who contravenes the provisions of subsection (1) commits an offence and shall be liable, on conviction, to a fine not exceeding five hundred thousand shillings or imprisonment for a term not exceeding three years, or both.

Section 11. Payments to third parties Section the first-mentioned person ("any legal entity including a trust;") is the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , a bank , an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") or a branch of a foreign institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") , a payment service provider or a designated payment system operator ("an operator of a designated payment system;") ; or

Section 12. Authorisation of Payment Service Provider Section 12(1) No person ("any legal entity including a trust;") shall, in Kenya conduct the business of a payment service provider except an authorized payment service provider . Section 12(2) A person ("any legal entity including a trust;") who contravenes the provisions of subsection (1) commits an offence and shall, on conviction be liable to a fine not exceeding five hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both.

Section 13. Application for authorisation Section 13(1) A person ("any legal entity including a trust;") proposing to transact the business of a payment service provider shall, before commencing such business, apply to the Bank for authorization. Section 13(2) An application under this section shall be made in the prescribed form and shall be forwarded to the Bank together with the prescribed fee. Section 13(3) In considering an application for authorization, the Bank may require to be satisfied as to the financial condition and history of the applicant, the character of its management, the adequacy of its capital structure and the convenience and needs of the area to be served and the public interest which will be served by granting of the authorisation. Section 13(4) The Bank may, subject to the payment of the prescribed fee and to such conditions as it may consider necessary, grant authorization to the applicant. Section 13(5) Where authorization has been granted under this section, the Bank may add, vary, or substitute conditions attached thereto. Section 13(6) An authorisation issued under this section shall, unless earlier revoked, be valid for twelve months next following the date of issue: Provided that where an application for its renewal is made under this section, the authorisation shall be deemed to continue in force until the application for renewal is determined.

Section 14. Renewal of authorisation Section 14(1) An authorisation made under section 13 may on expiry be renewed for a further period of twelve months: Provided that where an authorised payment service provider fails to commence business in Kenya within six months of the grant of authorisation, the authorized payment service provider shall, if still intending to conduct payment service business in Kenya, apply for authorization as if the first authorisation had never been granted. Section 14(2)(a) be made in the prescribed form and forwarded to the Bank together with the prescribed fee; Section 14(2)(b) be lodged with the Bank at least two months prior to the expiry of the authorisation. Section 14(3) An application for renewal of an authorization shall be considered in accordance with the provisions of section 13 .

Section 15. Revocation of authorisation Section 15(1)(a) ceases to carry on business in Kenya or goes into liquidation or is wound up, or is otherwise dissolved; Section 15(1)(b) fails to comply with the provisions of this Act or any condition attached to an authorisation; or Section 15(1)(c) conducts business in a manner detrimental to the best interests of the public. Section 15(2) Before revoking or suspending an authorization under this section, the Bank shall give an authorized payment service provider , not less than fourteen days notice in writing and shall consider any representations made to it in writing by the authorised payment service provider within that period.

Section 16. Netting agreements and rules Section 16(1) To the extent that a provision of the Insolvency Act ( Cap. 53 ), the Banking Act ( Cap. 488 ) the Building Societies Act ( Cap. 489 ) the Co-operative Societies Act ( Cap. 490 ) or the Microfinance Act ( Cap. 493C ) is inconsistent with this section, this section prevails. Section 16(2)(a) a written netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") agreement to which the participant is a party; Section 16(2)(b) the settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") rules; Section 16(2)(c) a clearing, netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") or settlement ("discharge of settlement obligations;") agreement to which the participant is a party; Section 16(2)(d) netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") rules applicable to the participant in relation to a settlement ("discharge of settlement obligations;") agreement. Section 16(3)(a) that was determined through netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") before the liquidation order or administration order, or the appointment of the statutory manager, was made but is to be discharged on or after the date on which the order or appointment was made; or Section 16(3)(b) the discharge of which was overdue on that date. Section 16(4)(a) discharging a payment or settlement obligation ("an indebtedness that is owed by one settlement system participant to another as a result of one or more settlement instructions;") in accordance with the settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") rules; Section 16(4)(b) any clearing, netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") or settlement ("discharge of settlement obligations;") agreement to which the participant was a party; or Section 16(4)(c) any netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") rules applicable to the participant in relation to those agreements. Section 16(5) As soon as practicable after an application to the High Court for the liquidation of a settlement system participant is made and, if a liquidation order is made in consequence of the application, as soon as practicable after the order is made, the applicant shall lodge with the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") a copy of the application and a copy of the order. Section 16(6) As soon as practicable after receiving a copy of an application for the liquidation of a settlement system participant , the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, if the participant is a designated payment system participant , notify the operator of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") of the application. Section 16(7)(a) the rules of the settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") ; or Section 16(7)(b) a clearing, netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") or settlement ("discharge of settlement obligations;") agreement to which the participant is a party; or Section 16(7)(c) any netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") rules applicable to the participant in relation to such an agreement. Section 16(8) When a settlement system participant is placed in liquidation or enters administration, or a statutory manager is appointed in respect of the participant, the liquidator, administrator or manager is bound by any payment or settlement ("discharge of settlement obligations;") that is final and irrevocable as provided by section 9 (2) or (3). Section 16(9)(a) an order of a court exercising jurisdiction under the law relating to insolvency in a place outside Kenya; or Section 16(9)(b) an act of a person ("any legal entity including a trust;") appointed in a place outside Kenya to perform functions under that law, Section 16(10) In this section, a reference to netting ("the determination of the net payment obligations between two or more settlement system participants within a payment clearing house or the determination of the net settlement obligations between two or more settlement system participants within a settlement system;") rules includes any recognised practices relating to the operation or application of those rules. [Act No. 19 of 2015 , s. 168.]

Section 7. Recognition of apayment system management body Section 7(1) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, upon designation of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") under this Act, automatically recognize the management body of such payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") . Section 7(2) A payment system management body ("a body recognized by the Central Bank in accordance with;") recognized pursuant to the provisions of this section shall be subject to the guidelines that may be issued by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") from time to time. Section 7(3) Where a payment system management body ("a body recognized by the Central Bank in accordance with;") recognised under subsection (1) oversees only one designated payment system ("a payment system designated in accordance with;") , the recognition of the payment system management body ("a body recognized by the Central Bank in accordance with;") shall stand revoked upon revocation of designation of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") : Provided that, where a recognised payment system management body ("a body recognized by the Central Bank in accordance with;") manages several designated payment systems, the revocation of designation of any one of the payment systems shall not affect the recognition status of the payment system management body ("a body recognized by the Central Bank in accordance with;") with respect to the payment systems whose designation has not been revoked.

Section 8. Objects,etc.of recognizedpayment system management body Section 8(1)(a) provide a forum for the consideration of matters of policy and mutual interest concerning its members; Section 8(1)(b) act as a medium for communication by its members with the Government, the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , any financial or other exchange, other public bodies, authorities and officials, the news media, the general public and other private associations and institutions; and Section 8(1)(c) deal with and promote any other matter of interest to its members and foster co-operation among them. Section 8(2)(a) to admit members and to regulate, control and with the approval of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") terminate membership; Section 8(2)(b) to constitute, establish or dissolve any body, committee or forum consisting of its members and which has an impact on, interacts with, has access to or makes use of any payment, clearing or settlement ("discharge of settlement obligations;") systems or operations; Section 8(2)(c) recommend for approval by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") criteria subject to which any person ("any legal entity including a trust;") is to be granted limited membership of the payment system management body ("a body recognized by the Central Bank in accordance with;") or is to be authorized to act as a system operator ("a person, other than a designated payment system operator, authorized in terms of(2)(c) to provide services to any two or more persons in respect of payment instructions;") or a payment clearing house system operator ("a person, other than a designated payment system operator, who clears on behalf of any two or more Central Bank settlement system participants;") within a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") ; and Section 8(2)(c)(i) recommend for approval by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") criteria subject to which any person ("any legal entity including a trust;") is to be granted limited membership of the payment system management body ("a body recognized by the Central Bank in accordance with;") or is to be authorized to act as a system operator ("a person, other than a designated payment system operator, authorized in terms of(2)(c) to provide services to any two or more persons in respect of payment instructions;") or a payment clearing house system operator ("a person, other than a designated payment system operator, who clears on behalf of any two or more Central Bank settlement system participants;") within a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") ; and Section 8(2)(c)(ii) authorize that person ("any legal entity including a trust;") to act as a system operator ("a person, other than a designated payment system operator, authorized in terms of(2)(c) to provide services to any two or more persons in respect of payment instructions;") or payment clearing house system operator ("a person, other than a designated payment system operator, who clears on behalf of any two or more Central Bank settlement system participants;") in accordance with that criteria; and Section 8(2)(d) allow a bank , an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") or a branch of a foreign institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") that is not a Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant to clear ("the exchange of payment instructions, and "clearing" shall be construed accordingly;") ; or Section 8(2)(d)(i) allow a bank , an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") or a branch of a foreign institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") that is not a Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant to clear ("the exchange of payment instructions, and "clearing" shall be construed accordingly;") ; or Section 8(2)(d)(ii) clear ("the exchange of payment instructions, and "clearing" shall be construed accordingly;") on behalf of a bank , an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") or a branch of a foreign institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") that is not a Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant :

Section 9. Effectingsettlement Section 9(1) Settlement shall be effected by payment of money or by means of entries passed through the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") or a designated payment system ("a payment system designated in accordance with;") . Section 9(2) A settlement ("discharge of settlement obligations;") that has been effected by payment of money or by means of an entry to the credit of the account maintained by a settlement system participant in the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") or a designated payment system ("a payment system designated in accordance with;") shall be final and irrevocable. Section 9(3) An entry to or payment out of the account of a designated payment system participant to settle a payment or settlement obligation ("an indebtedness that is owed by one settlement system participant to another as a result of one or more settlement instructions;") in a designated payment system ("a payment system designated in accordance with;") shall be final and irrevocable.

Section 17. Powers and functions of theCentral Bank Section 17(1) Notwithstanding subsection (2), the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, in the exercise of its role of formulating and implementing such policies as best promote the establishment, regulation and supervision of efficient and effective payment, clearing and settlement ("discharge of settlement obligations;") systems, exercise all the powers and perform all the functions conferred and imposed on it by this Act, the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") of Kenya Act ( Cap. 491 ), and any other law. Section 17(2)(a) delegate to any of its officers the exercise of any of its powers under this Act; or Section 17(2)(b) authorize any such officer to perform any of its functions under this Act. Section 17(3)(a) shall not prevent the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") from exercising that power or performing that function; and Section 17(3)(b) may at any time be withdrawn in writing by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") .

Section 17A. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing matters Section 17A(1) Pursuant to section 2A, 36A, 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ), the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes by all reporting institutions regulated and supervised by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") to whom the provisions of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ). Section 17A(2)(a) vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") ; Section 17A(2)(b) conduct onsite inspection; Section 17A(2)(c) conduct offsite surveillance; Section 17A(2)(d) undertake consolidated supervision of an institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") and its group; Section 17A(2)(e) compel the production of any document or information the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may require for the purpose of discharging its supervisory mandate under Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ); Section 17A(2)(f) impose monetary, civil or administrative sanctions for violations related to anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; Section 17A(2)(g) issue regulations, guidelines, directions, rules or instructions for anti-money laundering, combating the financing of terrorism or countering proliferation financing purposes; Section 17A(2)(h) cooperate and share information for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; and Section 17A(2)(i) take such action as is necessary to supervise and enforce compliance by reporting institutions in line with the provisions of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ) and any regulations, guidelines, rules, instruction or direction made or issued thereunder. Section 17A(3) For purposes of this section, “reporting institution ("a bank, mortgage finance company or a financial institution as defined in the Banking Act () or a microfinance bank business as defined in the Microfinance Act () or any other body which the Cabinet Secretary may, in consultation with the Central Bank, declare, by notice in the, to be an institution for the purposes of this Act;") ” has the meaning assigned to it under section 2 of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ). [Act No. 10 of 2023 , Sch.]

Section 17B. Penalties for violations relating to money laundering, terrorism financing Section 17B(1) No payment service provider , director, officer, employer, agent or any other person ("any legal entity including a trust;") shall violate or fail to comply with any provision of the Proceeds of Crime and Anti-Money Laundering Act, 2009, or any regulation, guideline, rule, direction or instruction issued under the said Act or under section 17A of this Act. Section 17B(2)(a) in case of a legal person ("any legal entity including a trust;") , to a penalty not exceeding twenty million shillings; Section 17B(2)(b) in the case of a natural person ("any legal entity including a trust;") , to a penalty not exceeding one million shillings; and Section 17B(2)(c) to additional penalties not exceeding one hundred thousand shillings in each case for each day or part thereof during which such violation or non-compliance continues.

Section 17C. Rights and fundamental freedoms Section All persons subject to this Act shall enjoy all rights and fundamental freedoms enshrined in the Constitution unless limited to the extent specified in Article 24 of the Constitution, this Act or any other Act. [Act No. 10 of 2023 , Sch.]

Section 17D. Limitation of right to privacy Section 17D(1) The right to privacy guaranteed under Article 31 of the Constitution is hereby limited under Article 24 of the Constitution only to the nature and extent contemplated under subsection (2). Section 17D(2)(a) the person ("any legal entity including a trust;") ’s home or property may, with a warrant, be searched; Section 17D(2)(b) the person ("any legal entity including a trust;") ’s possessions may be seized; Section 17D(2)(c) information relating to that person ("any legal entity including a trust;") ’s financial, family or private affairs where required may be revealed to the relevant authorities; or Section 17D(2)(d) the privacy of a person ("any legal entity including a trust;") ’s communications may be investigated or otherwise interfered with. Section 17D(3) A limitation of a right under subsection (1) shall apply only for the purpose of the prevention, detection, investigation and prosecution of proceeds of crime, money laundering and financing of terrorism. [Act No. 10 of 2023 , Sch.]

Section 18. Prohibition of issuance of payment instruments Section 18(1)(a) the issuing or use of the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") is detrimental to the reliable, safe, efficient and smooth operation of a national payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") ; or Section 18(1)(b) the prohibition is in the interest of the public. Section 18(2) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may, in considering whether to prohibit any person ("any legal entity including a trust;") from issuing or using any payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") under subsection (1), inspect the premises, equipment, machinery, apparatus, books or other documents, or accounts and transactions of the issuer or user of the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") , upon giving reasonable written notice to the issuer or user. Section 18(3) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, before issuing an order of prohibition under subsection (1), offer the issuer or user of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") a reasonable opportunity to make representations on the impending prohibition.

Section 19. Participation by theCentral Bank Section 19(1)(a) be a participant and enforce any failure to settle ("the inability of a settlement system participant to meet its settlement obligations in a clearing house;") arrangement; Section 19(1)(b) act as a custodian of a settlement ("discharge of settlement obligations;") participant’s settlement ("discharge of settlement obligations;") assets or act as a settlement ("discharge of settlement obligations;") agent. Section 19(1)(c) regulate and supervise such system(s). Section 19(2) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may provide any additional services it considers desirable, including facilities for clearing financial effects to designated payment system ("a payment system designated in accordance with;") participants.

Section 20. Provision of information to theCentral Bank Section 20(1) A person ("any legal entity including a trust;") shall, upon being required to do so, provide the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") with such information relating to a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") , in such form and at such times as the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may prescribe. Section 20(2)(a) the volumes and values of payment instructions cleared in the system; Section 20(2)(b) the volumes or values of the participant’s payment obligations and settlement ("discharge of settlement obligations;") obligations; and Section 20(2)(c) any other information regarding the operation of the system as the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may require. Section 20(3)(a) obtained by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") in accordance with subsection (1); and Section 20(3)(b) identifying a Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant , Section 20(4)(a) of which the disclosure is necessary to protect the integrity, effectiveness or security of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") , or if required by law to do so; or Section 20(4)(b) to any monetary authority or financial regulatory authority, within or outside Kenya, where such information is reasonably required for the proper discharge of the functions of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") or the requesting monetary authority or financial regulatory authority. Section 20(5) A person ("any legal entity including a trust;") who contravenes the provisions of subsection (1), (2) or (3) commits an offence and shall be liable on conviction, to a fine not exceeding five hundred thousand shillings, or to imprisonment for a term not exceeding one year, or both. Section 20(6)(a) a participant or its officers may be subject, shall be breached by reason of the disclosure in good faith, of any information under subsections (1) and (2) in the course of the performance of its duties and no action shall lie against the participant or any of its officers on account of such disclosure; Section 20(6)(b) the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") or its officers may be subject, shall be breached by reason of the disclosure in good faith, of any information under subsection (4)(a) and (b) in the course of the performance of its duties and no action shall lie against the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") or any of its officers on account of such disclosure.

Section 21. Settlement of disputes Section 21(1) If any Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant considers itself aggrieved by a decision taken by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") under any provision of this Act, the matter shall be deemed to constitute a dispute between that Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , which dispute shall be settled as provided in this section. Section 21(2) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned shall, within ninety days after the decision of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , in writing, furnish the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") with full particulars of the grievance, and thereafter the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall endeavour to settle the dispute within seven business days of the receipt by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") of those particulars. Section 21(3) If the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") do not settle the dispute as provided for under subsection (2), they shall refer the dispute to mediation within a further period of ten business days. Section 21(4)(a) the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall agree on a mediator; Section 21(4)(b) the mediator shall familiarize himself with the position held by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , respectively; Section 21(4)(c) the mediator, the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall discuss the dispute at a meeting attended by them all; Section 21(4)(d) the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, at or following such meeting, and with the aid of the mediator, attempt to settle the dispute by consensus; and Section 21(4)(e) the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall share the mediator’s costs in such proportion as they may agree. Section 21(5)(a) to a single arbitrator to be agreed upon by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") ; or Section 21(5)(b) failing such agreement, to an arbitrator appointed, at the request of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant or the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , by a recognised body concerned with the facilitation and promotion of the resolution of disputes by means of mediation or arbitration. Section 21(6) An arbitrator referred to in subsection (5) shall, as far as possible, be a person ("any legal entity including a trust;") appointed on account of his knowledge of the law and payment systems. Section 21(7) The provisions of the Arbitration Act ( Cap. 49 ) or any revisions thereof, shall apply, mutatis mutandis , to an arbitration undertaken in accordance with subsection (5). Section 21(8) The decision of the arbitrator shall be final and binding on the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system participant concerned and the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") .

Section 22. Power ofCentral Bankto advise and direct Section 22(1) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may, from time to time, issue directives to any person ("any legal entity including a trust;") regarding a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") on the application of the provisions of this Act. Section 22(2)(a) that reasonable grounds exist to believe that any person ("any legal entity including a trust;") is engaging in, or is about to engage in, any act, omission or course of conduct, with respect to the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") , that results or is likely to result in systemic risk ("the risk that failure of one or more settlement system participants, for whatever reason, to meet their payment obligations or their settlement obligations may result in any or all of the other settlement system participants being unable to meet their respective payment or settlement obligations") ; Section 22(2)(b) that reasonable grounds exist to believe that any person ("any legal entity including a trust;") is engaging in, or is about to engage in, any act, omission or course of conduct, that compromises or is likely to compromise the integrity, effectiveness, efficiency or security of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") ; Section 22(2)(c) the public interest; Section 22(2)(d) the integrity, effectiveness, efficiency or security of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") ; Section 22(2)(e) national financial stability; Section 22(2)(f) any other matter that the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may consider appropriate. Section 22(3)(a) cease or refrain from engaging in the act, omission or course of conduct or perform such other acts as are necessary to remedy the situation; Section 22(3)(b) perform such acts as are necessary to comply with the directive or to effect the changes; or Section 22(3)(c) provide the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") with such information and documents relating to the matter as specified in the directive. Section 22(4) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may cancel, in writing, any directive issued under this Act. Section 22(5) In considering whether or not to cancel a directive in accordance with subsection (4), the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall have regard to the factors referred to in subsection (2). Section 22(6) A directive issued by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall not have any retroactive effect. Section 22(7) Any person ("any legal entity including a trust;") who neglects, refuses or fails to comply with a directive issued under subsection (1) or (3) commits an offence and shall be liable on conviction to a fine not exceeding five hundred thousand shillings, or to imprisonment for a term not exceeding three years, or both. Section 22(8) A person ("any legal entity including a trust;") who receives a directive pursuant to the provisions of this section shall comply with the directive within such period as may be specified in the directive.

Section 23. Audits and inspection Section 23(1) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") shall, for the purposes of carrying out its functions under this Act, conduct audits and inspections of a designated payment system ("a payment system designated in accordance with;") or of an issuer of a designated payment instrument ("a payment instrument designated in accordance with;") . Section 23(2) Every designated payment system participant or the issuer of a designated payment instrument ("a payment instrument designated in accordance with;") shall, as may be required by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , assist the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") to the extent necessary, to enable the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") carry out an audit or inspection.

Section 24. Reports Section such reports as the Cabinet Secretary ("the Cabinet Secretary for the time being responsible for matters relating to finance;") may require; and

Section 25. Utilization of assets of adesignated payment system participant Section Despite anything to the contrary in any law relating to insolvency, any asset of a designated payment system participant which was provided prior to the issue of any order for that settlement system participant ’s winding-up by that participant to the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , or the designated payment system operator ("an operator of a designated payment system;") , as security for a loan in respect of its settlement ("discharge of settlement obligations;") obligations, may be utilized by the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") or the designated payment system operator ("an operator of a designated payment system;") , as the case may be, to the extent required for the discharge of the settlement ("discharge of settlement obligations;") obligations of the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") participants.

Section 26. Retention of records Section 26(1) Notwithstanding anything to the contrary in any law relating to the retention of records, the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") , the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") settlement system ("a system established and operated by the Central Bank for the discharge of payment or settlement obligations, or the discharge of payment and settlement obligations, between system participants in that system;") participants, payment clearing house ("an arrangement between two or more Central Bank settlement system participants, excluding a designated payment system operator, governing the clearing of payment instructions between those Central Bank settlement system participants;") system operators and system operators, shall retain all records obtained by them during the course of the operations and administration of a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or the issuance of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") , for a period of seven years from the date of each particular record. Section 26(2) The retention of records under subsection (1) may be effected by electronic means.

Section 27. Use of confidential information for personal gain Section 27(1)(a) any officer or employee of the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") ; or Section 27(1)(b) any member or employee of a payment system management body ("a body recognized by the Central Bank in accordance with;") , Section 27(2) It shall be a defence to a charge under subsection (1) for the person ("any legal entity including a trust;") charged to show that the information which he used was generally known to members of the public or to a substantial section of the public.

Section 28. Priority of certain instruments on winding up Section 28(1) In this section, "priority payment instruction ("an instruction to a settlement system participant to transfer funds or make a payment;") " means a money order, bank draft or similar payment instruction ("an instruction to a settlement system participant to transfer funds or make a payment;") issued, directly or indirectly, by a participant in a designated payment system ("a payment system designated in accordance with;") , but does not include an instrument issued by one such participant to another for the purpose of effecting a payment between them. Section 28(2)(a) are payable from the participant's assets; and Section 28(2)(b) rank in preference above any other unsecured claim against the assets. Section 28(3) A payment is not payable under subsection (2) in preference to any other claim against assets unless a request for the payment has been made within sixty days after the making of the liquidation order in relation to the participant concerned. Section 28(4) Subsection (2) does not permit a payment instruction ("an instruction to a settlement system participant to transfer funds or make a payment;") to be settled in preference to any other claim against any assets, if the instruction was drawn on or certified or issued by the participant concerned with a view to giving the drawee of the instruction a preference over the participant's other creditors. [Act No. 19 of 2015 , s. 171.]

Section 29. Misleading advertisements Section 29(1)(a) falsely represents that he is designated to operate the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or issue the payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") under the provisions of this Act; Section 29(1)(b) falsely represents that he is recognised to manage a payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") under the provisions of this Act; or Section 29(1)(c) is issued contrary to the provisions of this Act, Section 29(2) The Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") may at any time direct any person ("any legal entity including a trust;") to withdraw, amend or refrain from issuing any advertisement, brochure, circular or making or desist from making any other representation relating to participation in the payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") or issuance of a payment instrument ("any instrument, whether tangible or intangible, that enables a person to obtain money, goods or services, or to otherwise make payment;") , which in its sole discretion, it considers to be misleading.

Section 30. Relief from prosecution Section No action shall lie against the Central Bank ("the Central Bank of Kenya established under the Central Bank of Kenya Act ();") or any of its officers or other persons appointed or authorized to perform any function under this Act, in respect of anything done or omitted to be done by him in good faith in the exercise or performance of any power, authority, or function conferred or imposed on him under this Act.

Section 31. Regulations and guidelines Section 31(1) The Cabinet Secretary ("the Cabinet Secretary for the time being responsible for matters relating to finance;") may make regulations generally for the better carrying into effect the provisions of this Act. Section 31(2)(a) prescribe anything which under this Act may be prescribed; Section 31(2)(b) subject to this Act, issue guidelines in respect of any matter relating to the administration or enforcement of this Act; and Section 31(2)(c) prescribe monetary fines for payment system ("a system or arrangement that enables payments to be effected between a payer and a beneficiary, or facilitates the circulation of money, and includes any instruments and procedures that relate to the system;") operators, issuers of payment instruments or authorized payment service providers, which shall not exceed one million shillings.