US Names Kenya A Global Money Laundering Hotspot

A new report has named Kenya as a global hotspot for money laundering, terror financing, and financial fraud.

Other countries listed alongside Kenya in the International Narcotics Control Strategy Report tabled before the US Congress this month include Morocco, Nigeria, Ghana, and Benin.
 
The March 2021 report by the US Department of State states that Kenya remains vulnerable to money laundering in both formal and informal sectors.

Some of the most common criminal activities in Kenya include transnational organized crime, cybercrime, corruption, smuggling, trade invoice manipulation, trade in illegal timber and charcoal, wildlife trafficking, and illicit trade in drugs and counterfeit goods such as sugar and other agricultural products.

The report adds that criminals take advantage of the unregulated networks of hawaladars and other unlicensed remittance systems to facilitate unreported money transfers.

“Foreign nationals, including refugees and ethnic Somali residents, primarily use the hawala system to transmit remittances internationally,” the report says.

Part of the Sh195 billion Kenya received from Kenyans in the diaspora between January to August 2020 was attributed to criminal activities.

Kenya’s weak banking system, wire service, mobile money platforms, and an unregulated mobile-lending industry are also at the heart of the laundering schemes, the report adds.

The report recommends the implementation of good governance and anti-corruption measures to deal with the crimes.

“Despite progress, Kenya needs to strengthen implementation of good governance and anti-corruption measures and improve its AML/CFT regime. Bureaucratic, logistical, and capacity impediments may hinder the investigation and prosecution of financial crimes”

The report further indicates that Kenya’s anti-corruption agency lacks the technological support and training to handle more complex money-laundering operations.