Police in Muranga have arrested and questioned two people suspected of laundering money under the disguise of being commercial money lenders.

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The two, a man and a woman, were arrested after locals at Mukuyu Market alerted the police that they were leading money in the old Sh1000 notes which have been recalled by the CBK.

The incident was confirmed by area county commander Josphat Kinyua who said that his officers are investigating to establish whether they were really laundering money.

He said that they were demanding ID photocopies for those interested in the loans, and whom were to pay the money with a 10 percent interest on the agreed date.

“We want to find out whether the residents’ claims are true especially during this transition period from old currency notes to new currency bank notes, it could be a ploy to dispose of money acquired through dubious means,” he was quoted by the Nation.

The police boss said that the duo which reportedly began the suspicious operation on Thursday denied the claims during the interrogations, saying that they were recruiting interested people into a new microfinance.

He added that his officers are also investigating the said microfinance institution, but have since released the duo which is expected to report back with the microfinance's registration papers.

"We want first to establish the details and the existence of the micro-finance organisation before we take action. People might come up with new tricks of money laundering," he added.

The Central Bank of Kenya has set October 1 as the last date of use of the old bills, after which they will lose their relevance, in a bid to counter corruption barons hiding money out of banks.