By Fauxile Kibet
The United States has listed Kenya as a money laundering hotspot and accused the East African nation of lacking sufficient controls over the circulation of dirty money and also lacking laws to counter terror financing.
In a recent report, the United States Department of Narcotics and Law Enforcement Affairs said that money laundering in Kenya is fueled by domestic and foreign criminal operations.
“Kenya remains vulnerable to money laundering and financial fraud. Criminal activities include transnational organised crime, cybercrime, corruption, smuggling, trade invoice manipulation, illicit trade in drugs and counterfeit goods, trade in illegal timber and charcoal, and wildlife trafficking,” says the report.
Kenya has already formed an anti-money laundering task force to establish the extent of money laundering in the most susceptible sectors of the economy.
This has been seen as a means to institute a crackdown on the suspects.
In the report, the US department points a finger at Kenya’s institutions accusing them of being part of the money-laundering scheme.
“Financial institutions engage in currency transactions connected to international narcotics trafficking involving significant amounts of US currency derived from illegal sales in Kenya, other East Africa countries, the United States, and elsewhere,” added the 2019 International Narcotics Control Strategy Report.
It further adds that unregulated networks of unlicensed remittance systems facilitate cash-based, unreported transfers that the government cannot track.
Proximity to Somalia
Kenya’s proximity to Somalia, the report says, makes Kenya an attractive location for money laundering as well as piracy related earnings.
The report also says that Kenya has made some strides towards implementing Anti-Money Laundering laws but more needs to be done to fully actualize the regulations.
“While Kenya has made strides in implementing an AML framework, challenges remain to achieving comprehensive, effective implementation of AML laws and regulations,” it said.
Adding, “Kenya should fully satisfy its commitments on good governance, anti-corruption efforts, and improvements to its AML regime.”