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US puts Kenya on list of cash laundering hotspots

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bagamoyo

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bagamoyo

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March 28, 2019

The United States government has put Kenya on a list of global hotspots for money laundering, citing insufficient controls on the circulation of dirty cash and the lack of laws against terrorism financing.

A report published on Friday by the United States Department of State Bureau for International Narcotics and Law Enforcement Affairs said money laundering in Kenya occurs in the formal and informal sectors, fuelled by domestic and foreign criminal operations.
“Kenya remains vulnerable to money laundering and financial fraud,” says the report.

Nations that are classified as havens for money laundering by the US attract scrutiny from global financial players and banks while investors are likely to carry out additional checks on payments involving entities from listed jurisdictions.
The report said “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,” said the report. https://www.businessdailyafrica.com...h-laundering/539546-5050904-jwwmva/index.html

FULL REPORT : UNITED STATES DEPARTMENT OF STATE : ON KENYA MONEY LAUNDERING
The 2019 International Narcotics Control Strategy Report (INCSR) is an annual report by the Department of State to Congress prepared in accordance with the Foreign Assistance Act. It describes the efforts of key countries to attack all aspects of the international drug trade in Calendar Year 2018. Volume I covers drug and chemical control activities. Volume II covers money laundering and financial crimes.


-- Volume I: Drug and Chemical Control


-- Volume II: Money Laundering and Financial Crimes

Kenya

OVERVIEW

Kenya remains vulnerable to money laundering and financial fraud. It is the financial hub of East Africa, its banking and financial sectors are growing in sophistication, and it is at the forefront of mobile banking. Money laundering occurs in the formal and informal sectors, deriving from domestic and foreign criminal operations. Criminal activities include transnational organized crime, cybercrime, corruption, smuggling, trade invoice manipulation, illicit trade in drugs and counterfeit goods, trade in illegal timber and charcoal, and wildlife trafficking.

VULNERABILITIES AND MONEY LAUNDERING METHODOLOGIES

INCSR 2019 Volume II Money Laundering
127

Financial institutions engage in currency transactions connected to international narcotics trafficking involving significant amounts of U.S. currency derived from illegal sales in Kenya, other East Africa countries, the United States, and elsewhere.

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. Foreign nationals, including refugee populations and ethnic Somali residents, primarily use the hawala system to transmit remittances internationally. Diaspora remittances to Kenya totaled $1.38 billion between January and June 2018. Most of Kenya’s 165,900 mobile-money agents use Safaricom’s M-Pesa system, and there are 14 million accounts on M-Shwari, a mobile lender. These services remain vulnerable to money laundering activities.

Kenya is a transit point for regional and international drug traffickers, and TBML remains a problem. Kenya’s proximity to Somalia makes it an attractive location for laundering piracyrelated proceeds, and a black market exists for smuggled and grey market goods. Goods transiting Kenya are not subject to customs duties, but authorities acknowledge many such goods are sold in Kenya. Trade in goods provides counter-valuation in regional hawala networks.

KEY AML LAWS AND REGULATIONS

Under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) and other banking regulations, Kenyan financial institutions and entities reporting to the Financial Reporting Center (FRC), Kenya’s FIU, are subject to KYC and STR rules and have enhanced due diligence procedures in place for PEPs.

The POCAMLA legislation provides a comprehensive framework to address AML issues and authorizes appropriate sanctions for money laundering crimes. The Office of the Director of Public Prosecutions has used ancillary provisions in the POCAMLA to apply for orders to restrain, preserve, and seize proceeds of crime in Nairobi. In 2016, the judiciary established the Anti-Corruption and Economic Crimes Division in the High Court.

In March 2017, Kenya enacted the Proceeds of Crime and Anti-Money Laundering (Amendment) Act 2017. The legislation includes new legal sanctions for economic crimes and measures to identify, trace, freeze, seize, and confiscate crime proceeds. Persons can be fined up to (approximately $47,400 (5 million Kenyan shillings), and corporate bodies up to approximately $237,100 (25 million Kenyan shillings), with up to approximately $94,900 in additional fines for failure to comply. It also establishes an Assets Recovery Agency to handle all cases of recovery of crime proceeds.

Extradition between the United States and Kenya is governed by the 1931 U.S.-U.K. Extradition Treaty. The United States and Kenya do not have a bilateral MLAT; however, Kenya is party to relevant multilateral law enforcement conventions that have mutual legal assistance provisions. The U.S. and Kenya also can make and receive requests for assistance on the basis of domestic laws.
READ MORE:
Source: https://www.state.gov/documents/organization/290502.pdf
 
eliakeem

eliakeem

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eliakeem

eliakeem

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That is agressiveness.
But it's dangerous as al shabab can use the loop hole.
 

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