According to The United States
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.
The report has its basis on citing insufficient controls on the circulation of dirty cash and the lack of laws against terrorism financing.
“Kenya remains vulnerable to money laundering and financial fraud,” says the report.
“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.”
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.
Kenya recently formed a high-powered anti-money laundering task force to establish the extent of money laundering in the most susceptible sectors of the economy, setting the stage for a crackdown on the suspects.
The team gazetted by Treasury Secretary Henry Rotich brings together 30 State agencies from the security apparatus, the Judiciary, as well as banks, Saccos, real estate and gaming regulators.
“Financial institutions engage in currency transactions connected to international narcotics trafficking involving significant amounts of US currency derived from illegal sales in Kenya, other East Africa countries, the United States, and elsewhere,” added the 2019 International Narcotics Control Strategy Report.
The report prepared annually by the US Department of State has been presented to the US Congress.
It described Kenya’s vibrant financial system as a magnet for money laundering.
“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,” it said.
The report says Kenya’s proximity to Somalia makes it an attractive location for laundering piracy-related proceeds.