What you need to know:
- Many disbelievingly thought blockchain would have no application beyond the magic of bitcoins.
- The National Treasury and the financial institutions are yet to fully embrace blockchain, attributable to weak operational infrastructure.
n recent years, regulators have fined financial institutions $26 billion (Sh2.6 trillion) for not complying with anti-money laundering (AML) and know your customer (KYC) requirements.
Kenya, being the financial hub and at the forefront of East Africa’s mobile banking, is vulnerable to money laundering, financial fraud and terrorism financing.
The banking sector, for instance, is allegedly the regional hub for accumulation and concentration of wealth, providing friendly offshore centres to store illicit holdings.
Many disbelievingly thought blockchain would have no application beyond the magic of bitcoins. Defined as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way, it is a “simple-to-operate” technology that offers transparent information storage, tamper-proof digital coding and database sharing and is immune to unauthorised deletion and revision of business records. Experts believe it can help to tackle money laundering.
The National Treasury and the financial institutions are yet to fully embrace blockchain, attributable to weak operational infrastructure. But to enhance the capacity of State to deal with corruption, it is an imperative.
It would, for instance, enable the risk teams and regulators at the banks to study the recorded data, including transactions and lending activity, to get an impressively clear and comprehensive picture about where the money is coming from.
Its analytics can help banks to get incredibly detailed data on wallet addresses. This is key to meeting AML and KYC obligations as it appraises the transaction activities of customers, giving banks real-time transparency on customer activity and helping the risk teams to generate accurate risk scores.
In other businesses, it can create foundations for economic and social systems. It offers a digital promise that would provide impetus to the business development and compliance and ensure a company culture that prioritises financial and commercial integrity and good conduct.