NAIROBI (Thomson Reuters Foundation) - The amount of illicit money entering Kenya from faulty trade invoicing, crime, corruption and shady business activities has increased more than five-fold in a decade, new data has shown.
The data, calculated for Thomson Reuters Foundation by Global Financial Integrity, shows these illicit inflows now equal roughly 8 percent of Kenya’s economy.
Jackson Kitili, interim director of Kenya’s Financial Reporting Centre, a specialised government agency set up in October 2012 to deal with money laundering and other financial crimes, talks about progress in fighting financial crimes.
Q Do you think the government is committed to tackling money laundering?
A In the last financial year, we had a budget allocation of 90 million Kenyan shillings ($1.1million). This financial year it has doubled to 200 million ($2.4m). I think it is a sign of the seriousness of the government.
Q In June, the Financial Action Task Force – the global standard setting body for anti-money laundering [AML] and combating the financing of terrorism – said that Kenya had strategic deficiencies. What’s your response?
A That’s history. Now we are receiving [suspicious transaction] reports, analysing them and disseminating them. We are now in full force.
The number of Suspicious Transaction Reports received to date totals 73. All have been analysed and 14 have already been disseminated to the law enforcement agencies of the government for further investigation and action.
Q What have you found?
A We have corruption. We have theft. Most of it is basically corruption and fraud.
Q Critics might blame you for not securing any prosecutions.
A We don’t do investigations. We can do the intelligence. Our work is basically three things: receive reports, analyse them and add value, and then disseminate them to the law enforcement agencies.
We have gone into an MOU [Memorandum of Understanding] with the police. They have already started an [AML] unit within the police, the CID department, whom we liaise with.
If it is corruption, they will take it to the Ethics and Anti-Corruption Commission. If it needs more intelligence, they will take it to National Security Intelligence Service.
Q Do you have all the staff you need?
A We have 12. We got four from the Central Bank and an extra four. Police sent four. Now we are preparing to start recruiting staff so at least we can go to 26.
We are looking for people to be seconded from Capital Markets Authority [CMA], Insurance Regulatory Authority, Director of Public Prosecutions.
Q How far have you got in implementing the 2010 Proceeds of Crime Act, Kenya’s key piece of AML legislation?
A The regulations were released in April this year. We have gone into drawing up the instruments through which the regulators can ensure compliance. We have already signed an MOU with the Central Bank. We are in the process of signing MOUs with the CMA and Kenya Revenue Authority.
Q Under the Proceeds of Crime Act, any company providing money transfer services has to report suspicious transactions to you. Is it easy for the government to register them and get them to report?
A We have been getting reports from the mobile money transfers, Mpesa.
When it comes to hawala [a trust-based method of transferring money] and any other informal payment system, they [Central Bank] have a problem. They will need some minimum requirements to register them like telephone bills, power bills. But do they have them?
Q What’s the job like?
A It is not easy. It’s very risky also. The job is not easy but what is basic is coordinating with other stakeholders. If we work together, we can always get through.
I think it is important even for reporting institutions to get capacity built and also create awareness for them. When they prepare their reports and forward them to FRC, they must have done some analysis to really come out with a well built suspicion of that transaction.
Q Is Kenya ready to become an international financial centre?
A In short, having an institution like this one is enough to say that we are prepared to handle that.
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