Kenyan investigative agencies flagged and investigated more than Sh86 billion generated from suspected illicit activities. PHOTO | SHUTTERSTOCK
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Kenyans under probe over Sh86bn ‘illicit’ transactions
Kenyan investigative agencies flagged and investigated more than $591.36 million (Sh86 billion) generated from suspected illicit activities, including corruption, fraud and cybercrimes, in the three years to July 2023, raising fears that part of the money may have been laundered into the financial system.
Data from the Financial Reporting Centre (FRC), the entity that collects intelligence on the country’s financial system, says the amounts relate to the period between 2021 and 2023, with corruption and economic crimes topping the list of predicate offences.
Predicate offences, also known as underlying offences, are activities that generate money from unlawful sources to be laundered so as to appear legitimate. Those who generate money from such activities do so then attempt to conceal the origin by trying to pump it into a legitimate financial system.
Out of 6,747 cases of suspected illicit cash valued at Sh86 billion that were flagged, 4,271 with values involved being $316.49 million (Sh46.1 billion) were prosecuted.
Just 94 suspected corruption and economic crimes in the three years realised the highest proceeds at $299.34 million (Sh43.55 billion), showing that those seeking to launder money view this as the most rewarding means.
The FRC says in its national risk assessment report corruption and economic crimes are the leading proceeds-generating predicate offences in Kenya by value and are rated high risk. These offences mainly relate to bribery, unexplained wealth, embezzlement of public funds, and abuse of office, among others.
The financial intelligence unit reported 1,938 cases relating to fraud and forgeries that generated $104.1 million (Sh15.14 billion), yielding the second-highest illicit cash.
“The number of fraud and forgery-related offences rank higher than other proceeds generating crimes that were investigated and prosecuted. However, corruption-related offences are leading by a significant margin, in terms of value,” says the FRC, citing the Directorate of Criminal Investigations (DCI) data.
“The indication could be that fraud and forgery cases are yielding low values, in general, for laundering compared to corruption. That is, most proceeds generated from fraud and forgery-related offences, are seemingly for subsistence rather than laundering.”
The DCI data shows tax-related crimes amounted to Sh12.7 billion and were from 104 cases. A further $84.16 million (Sh12.25 billion) was directly generated from money laundering activities.
Other offences, such as cybercrime, drug dealing, human trafficking and wildlife crimes, netted a combined $16.45 billion (Sh2.39 billion) for the suspected offenders.
“Going by the number of cases and the corresponding values, the indication could be that fraud and forgery cases are yielding low values, in general, for laundering compared to corruption,” says the FRC.
Typical money laundering schemes entail opening bank accounts and making periodic cash deposits, which do not correspond to the suspects’ known sources of income.
Banks in the three years filed with the FRC suspicious transaction reports valued at Sh5.6 billion, showing the high risk in the sector.
To avoid detection, the deposits are made in tranches below the reporting threshold to evade the attention of the authorities and prudential guidelines which require that an account holder declare the source of the money.
The report adds that many of such suspects usually choose to make no withdrawal from those accounts despite receiving huge sums so that they act innocent.
“During the assessment, it emerged that nearly all fraud and forgery cases in the country were being facilitated through the banking sector. This could be attributed to the fact that the banking sector invokes public confidence, which criminals are apparently taking advantage of,” says the report.
The report adds that criminals find banks alluring due to their extensive cross-border networks, interbank ties, and products and services that open themselves up to the risk of money laundering.
