Kenya a hub for money laundering: US report

Money laundering
How money laundering works. PHOTO/COURTESY:

Kenya has been identified as being susceptible to money laundering according to a new report published by the United States Department of State Bureau for International Narcotics and Law Enforcement Affairs.

According to the 2019 International Narcotics Control Strategy Report published on Friday last week, Kenya remains vulnerable to money laundering and financial fraud as a result of domestic and foreign criminal activities that occur in both the formal and informal sectors.

“Financial institutions engage in currency transactions connected to international narcotics trafficking, involving significant amounts of U.S. currency, which is derived from illegal sales in Kenya, other East African nations, the United States and elsewhere,” the report reads in part.  

The report similarly pinpointed Kenya’s proximity to Somalia as a key facilitator of money laundering within the country’s borders because pirate related proceeds end up in the nation. Somalis also use a free-for-all network of Hawaladars (money agents) to transfer diaspora funds into Kenya and other countries and these transactions cannot be regulated by Kenya’s regime.

“Banks, wire services, and mobile payment and banking systems are increasingly available in Kenya. Nevertheless, unregulated networks of hawaladars and other unlicensed remittance systems facilitate cash-based, unreported transfers that the government cannot track,” the Narcotics Control Strategy Report reads.

Despite Kenya recently launching an Anti-Money Laundering (AML) taskforce to establish the extent of money laundering in the country, the report clearly states that the tracking and investigation of suspicious transactions within the mobile payment and banking systems remain difficult and that more needs to be done to curb the money laundering pandemic in the region.

“Kenya should fully satisfy its commitments on good governance, anti-corruption efforts and improvements to its Anti Money Laundering (AML) regime. While Kenya has made strides in implementing an AML framework, challenges remain to achieving comprehensive, effective implementation of AML laws and regulations,” the US report advised.

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