JUBA, July 1 (Xinhua) -- South Sudan's central bank on Monday directed all commercial banks to suspend transaction in Kenyan currency until October as demanded by its Kenyan counterpart in a bid to curb illicit financial flows and counterfeit.

The Bank of South Sudan (BOSS) in a circular issued in Juba said the move was necessary to curb illicit financial flows and counterfeits.

"The Central Bank of Kenya has informed us that it has started issuance of a new series of Kenyan shillings banknotes. The measure is partly intended to combat the emerging concerns of illicit financial flows and counterfeits," said Moses Makur Deng, director general for banking supervision, research and statistics at BOSS.

It added that the directive will help discourage illicit transactions in Kenyan currency in South Sudan during and beyond the period of conversion from old Kenyan shilling banknotes to the new ones.

"Given these concerns, the Bank of South Sudan hereby direct all the commercial banks and other non-bank financial institutions to be vigilant and to subject all such transactions to strict due diligence," it said.

"We are specifically directing you to immediately stop accepting deposits in Kenyan shillings to ensure that illicit flows in Kenyan shillings do not return to Kenya's financial system through financial institutions in South Sudan," it added.

BOSS also called on the financial institutions it overseas to share with it relevant information and intelligence on any illicit transaction.

The Central Bank of Kenya (CBK) has kicked off the process of phasing out old notes in circulation and replacing them with new generation currency notes.

Kenya is withdrawing the old 1,000 shilling note with a new note in an exercise expected to be complete by Oct. 1.