The United States places Kenya on the list of money laundering hotspots

The US government has placed Kenya on a list of money laundering hot spots around the world, citing inadequate controls over the circulation of dirty money and the lack of laws against the financing of terrorism.

A report released Friday by the US State Department for International Narcotics and Law Enforcement Affairs said that money laundering in Kenya occurs in the formal and informal sectors. informally, fueled by domestic and foreign criminal

"Kenya remains vulnerable to money laundering and financial fraud," the report says.

"It's the financial center of East Africa, its banking and financial sectors are becoming more sophisticated and it is at the forefront of mobile banking."

Nations ranked as money laundering havens by the United States attract the attention of financial players and banks around the world, while investors are likely to carry out additional payment controls involving listed jurisdiction entities .

The report states that "criminal activities include transnational organized crime, cybercrime, bribery, smuggling, handling of commercial invoices, illicit trade in drugs and counterfeit goods, trade in illegal timber and charcoal and Wildlife trafficking, "says the report.

Kenya recently formed a high-level anti-money laundering task force to establish the extent of money-laundering in the most vulnerable sectors of the economy, paving the way for the fight against money laundering. to a crackdown on suspects.

The Treasury Secretary's team, Henry Rotich, brings together 30 agencies of the security apparatus, the judiciary, banks, saccos, real estate regulators and gambling.

"Financial institutions carry out foreign currency transactions related to international drug trafficking involving significant amounts of US dollars from illegal sales in Kenya, in other East African countries. , in the United States and elsewhere, "added the 2019 International Narcotics Control Strategy Report.

The report prepared annually by the US State Department was presented to the US Congress.

He described Kenya's dynamic financial system as an attraction for money laundering.

"Banks, wireline services and mobile payment and banking systems are increasingly available in Kenya. Nevertheless, networks of unregulated hawaladars and other unlicensed funds transfer systems facilitate undeclared cash transfers that the government can not follow, "he said.

The report states that Kenya's proximity to Somalia makes it an attractive place for laundering piracy products.

Under the Proceeds of Crime (Money Laundering) Act (POCAMLA) and other banking regulations, financial institutions and entities in Kenya are required to report to the Information Center. Financial Reporting Center (FRC).

However, the report indicates that, although Kenyan banks are subject to Know Your Customer (KYC) and STR (Suspicious Transactions Reporting) rules, and have put in place enhanced due diligence procedures for PEPs. exposed).

"While Kenya has made progress in implementing an AML framework, the full and effective implementation of AML laws and regulations remains difficult," he said.

"Kenya must fully respect its commitments on good governance, the fight against corruption and improving its regime against money laundering," he added.

He proposes that an automated system improves the effectiveness and ability of the FRC to badyze suspicious transactions.

"Although the FIU receives STRs from some money transfer or value transfer service providers (MVTS), this sector is more difficult to oversee for compliance with the AML," the report says.

"To require bank statements or to seize an account, the police must obtain a court order by presenting evidence linking the deposits to a criminal offense. The confidentiality of this process is not well preserved, which helps to inform account holders and transfer badets. "

According to the report, the government, particularly the police, should allocate sufficient resources to build the institutional capacity and investigative skills needed to conduct complex financial investigations independently.

"The tracking and investigation of suspicious transactions in mobile payment and banking systems remains difficult," he said.

In February, Central Bank governor Patrick Njoroge reacted against the offer of MPs seeking to relax anti-money laundering laws, warning that the proposed amendments would thwart the fight against corruption and cut Kenya's banking sector at risk. global financial system.