Kenya put on the spot for laxity in dirty cash fight
What you need to know:
- Anti-money laundering assessors to give draft report next month.
- US State Department raises concerns that suspects could move assets before seizure.
A team of anti-money laundering assessors have retreated to write a verdict on compliance of Kenya’s financial systems with international standards to combat dirty cash dealings.
The team from 19-country Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) —the regional watchdog — has, in the last six months, been evaluating the effectiveness of the country’s financial systems and laws in fighting money laundering and terrorism financing.
Kenya’s Financial Reporting Centre (FRC) said the assessors, who had been auditing systems and laws since September, concluded their work on February 11. FRC director-general Saitoti ole Maika said the assessors are expected to submit a draft report to Kenya’s watchdog next month.
FRC will then give updates on areas of concerns raised before the final report is presented to the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, which will hold plenary and working group meetings on October 16–21 in Paris.
“Pursuant to what we discussed last time, there were issues that they raised that are of policy, regulatory or legislative nature. We would have amended the laws and even provided policy guidelines on certain issues by then,” Mr Maika said, without detailing.
“We will give updates based on new development areas so that they can calibrate the report based on the reality on the ground because their assessment will be correct as at February 11.”
This comes in the wake of a report by the US State Department warning of laxity amongst Kenyan officials in the global fight against money laundering, with officials tipping suspects to move assets before seizure.
The annual International Narcotics Control Strategy Report (INCSR) suggested mobile lending platforms on Safaricom’s M-Pesa system such as Mshwari and KCB-M-Pesa were not closely regulated, while proximity to Somalia has made Kenya an “attractive destination for funds from unregulated Somali sectors.
Kenya’s enforcement regimes are legally sound, but authorities lack the resources, and perhaps the will, to enforce them with vigour,” said the US Department report.
The Treasury says in the 2022 Budget Policy Statement the ESAAMLG’s assessment, the second after the last one in 2010, focused on the “country’s status on applying a risk-based approach in addressing money laundering and terrorism financing (ML/TF) and effectiveness of the country’s AML/CFT framework”.
Other areas that were evaluated included risks posed by financial inclusion products like M-Pesa and the status of amending the law to include advocates, notaries, and other independent legal professionals as reporting agents for FRC.
The law requires financial institutions such as banks and Saccos, casinos, accountants, and real estate agents to keep records of cash transactions of more than Sh1 million and report suspicious deals to the FRC.