Kenya is a hotbed for money laundering and fraud-report

By Samuel Ouma

The March 2021 report on International Narcotics Control Strategy Report has ranked Kenya among the countries where money laundering, terror financing, and financial fraud are widespread.

The report tabled before the US Congress said the East African nation is vulnerable to money laundering and terror financing both in formal and informal sectors.

As per the report, the criminals have found loopholes in the unregulated mobile money transfer systems, the hawala system of banking, and Trade-Based Money Laundering.

Kenya’s strategic location and its proximity to Somalia have also made criminal activities simple and easy.

Major criminal activities in East Africa's financial hub are transnational organized crime, cybercrime, corruption, smuggling, trade invoice manipulation, trade in illegal timber and charcoal, wildlife trafficking, and illicit trade in drugs counterfeit goods.

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

The report further noted that the diaspora remittances to Kenya between January to August 2020 were 1.78B USD (Sh178 billion), some of which are purported to be proceeds of the narcotics trade.

The report published by the US State Department proposed good governance and strict anti-corruption measures to deal with the vice.

“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.

Other African countries that fall in the category are Morrocco, Nigeria, Ghana, and Benin.

Cyprus, Cuba, Italy, Mexico, Turkey, United Arab Emirates, Vietnam, India, Cayman Islands, United States, the UK, and Colombia are also some of the countries struggling to deal with money laundering, terror financing, and financial fraud.