Kenya Intensifies Efforts to Counter Money Laundering

Kenya Intensifies Efforts to Counter Money Laundering
PHOTO - Horseed Media - Government Targets Weak Links in Fight Against Dirty Money
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The government is increasing its efforts to combat money laundering in Kenya, recognizing the growing risks associated with digital transactions in sectors such as banking, money remittance, and real estate.

Kenya’s strategic geographical location as a regional business and travel hub, along with its strong trade connections to East African economies and the rest of the world, has been instrumental in its economic growth. However, these advantages have also exposed the country to higher risks of money laundering and terrorism financing due to the nature and scale of trade and global ties.

To address these concerns, the government is expanding its focus to include sports betting firms, real estate companies, law firms, banks, and savings and credit cooperatives (saccos). This approach aligns with the findings of the 2021 National Risk Assessment on Money Laundering and Terrorism Financing, which highlighted Kenya’s vulnerability due to its geographic positioning, trade connectivity, and extensive use of financial technology.

The assessment identified the banking industry as having the highest vulnerability to money laundering, followed by real estate, money remittance providers, saccos, legal professionals, and second-hand motor vehicle dealers. Proposed amendments to the Anti-Money Laundering and Combating of Terrorism Financing Law, including stricter penalties for handling large undeclared cash volumes, are set to strengthen existing regulatory measures.

In the latest move, the government has initiated registration requirements for real estate agencies, saccos, casinos, forex bureaus, and life insurance brokers with the anti-money laundering watchdog, Financial Reporting Centre. Additionally, the Central Bank of Kenya has directed money remittance providers to sell daily foreign exchange currency above $100,000 to banks, enhancing oversight of large digital transactions.

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Sacco Societies Regulatory Authority (Sasra) is urging saccos to improve their reporting practices to prevent potential money laundering through investments classified as “other assets.” The regulator has observed a significant increase in such investments and seeks full disclosure to mitigate the risk of fraudulent activities.

Kenya has also increased scrutiny on banks to ensure compliance with anti-money laundering measures, including proper recording of cash transactions of $10,000 and above, following previous instances of non-compliance.

In the realm of digital currencies, Kenya remains cautious and is investigating the operations of Worldcoin, an iris biometric cryptocurrency. The government views cryptocurrencies as a potential weak link for money laundering due to their lack of regulation.

Furthermore, the government has revoked licenses for betting firms, categorizing them as high-risk for money laundering. Integration of tax systems with betting firms now provides real-time visibility of money flows for taxation purposes.

The government’s efforts extend to the legal sector, where lawyers are being encouraged to report suspicious transactions to the Financial Reporting Centre, marking a significant step in combating money laundering. Authorities are also working to ensure greater transparency by requiring companies to disclose the identities of secret shareholders.

Kenya aims to align fully with global anti-money laundering standards set by the Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). These standards include customer due diligence measures for transactions above designated thresholds.

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