The United States government has flagged Kenya over what it terms as reduced efforts in dealing with money laundering and financial fraud.
In the 2022 International Narcotics Control Strategy Report (INCSR) released by the US State Department, the report noted that Kenya had relaxed some of the laws that targeted money laundering and wire fraud.
In particular, the report cited President Uhuru Kenyatta’s move to lift the regulation requiring financial institutions to report cash transactions above Ksh1 million.
President Uhuru Kenyatta addressing a delegation of leaders from Marsabit, Isiolo and Tana River counties at State House on Tuesday, February 22, 2022.
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“Kenya is vulnerable to money laundering, financial fraud, and terrorism financing, and it appeared to take a step backward in the past year. Kenya is the financial hub of East Africa, and mobile banking far surpasses cash transactions in the formal economy.
“The country’s enforcement regimes are legally sound, but authorities lack the resources, and perhaps the will, to enforce them with vigor. In October 2021, President Kenyatta ordered the lifting of the large cash transaction reporting requirement,” read the report.
Additionally, the report noted that there was laxity by the government to implement regulations requiring companies to reveal details of their owners and beneficiaries.
“Kenya’s Business Registration Service has repeatedly extended deadlines this year for companies to submit disclosures, but the compliance rate remains insufficient.”
The US also noted that Kenya was a hotspot for individuals engaging in financial fraud, adding that many drug dealers from neighboring countries were transacting businesses in the country.
“Kenya is a transit hub for both East and Central Africa used by international traffickers of narcotics, persons, weapons, wildlife, timber, charcoal, and minerals.
“The country’s proximity to Somalia makes it an attractive destination for funds from unregulated Somali sectors, including the khat and charcoal trades. Goods reported at points of entry as transiting Kenya are not subject to customs duties, but authorities acknowledge many such goods are sold in Kenya,” read the report added.
However, the report noted that some government agencies had made steps in the investigation and prosecution of individuals engaging in money laundering and financial fraud.
“The Ethics and Anti-Corruption Commission (EACC) and Kenya’s Assets Recovery Agency (ARA) have had some success in recent years with corruption investigations leading to successful prosecutions and asset seizures, but ARA requires technological support and training to grapple with more complicated money laundering operations,” read the report.
Ethics and Anti-Corruption Commission (EACC) Offices at Integrity Centre in Nairobi. Monday, 18 November 2019.
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