AG vows to fight money laundering kingpins

By James Mbaka

The Attorney-General (AG) Prof Githu Muigai has warned that the Government will crackdown on  perpetrators of illicit capital flows in the country.

Speaking in a Nairobi hotel, when he officially opened a workshop on Illicit Financial Flows (IFFs), the AG said the State  has put in place measures to combat illegal transfer of cash into and out the country.

The workshop brought together anti-corruption agencies from East Africa under the Association of East African anti-corruption authorities and experts from the World Bank.

Sluggish economic growth has been blamed on illegal financial in and out flows, which constitute a major source of resource leakage.

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This drains foreign exchange reserves, reducing tax collection and dwindling investment inflows.

In admitting the severity of illegal capital and informal flows, Prof Muigai regretted that money-laundering practices not only deny the country revenue but also undermined economic growth.

He said latest trends indicate that fraudsters have adopted more sophisticated ways in executing fraud. This is due to the evolving nature of technology, which facilitates faster movement of funds around the economy.

One of the major areas of concern is identity theft, which has been recognised as a key driver of fraud in the capital markets and the financial sector. “The methods and channels of illicit financial outflows are many and varied including tax havens and secrecy jurisdictions, over-invoicing, underpricing, and different money laundering strategies,” he said.

“This source of resource outflows is far bigger and higher in terms of scale and magnitude than the normal corruption channels, which are focused upon globally.”

Mid last year, the AG wrote to the World Bank raising concern that Kenya was losing huge amounts of money through illegal transactions across borders. Prof Muigai then sought for technical and financial aid to set up an asset recovery agency,  saying lack of a body to deal with money laundering has made it difficult to recover stolen assets.     

“Kenya has over the last four decades lost billions of dollars through illegal financial flows out of her borders,” the letter indicated.

“We have not been able to successfully recover these stolen assets.  We are looking to engage global partners in our quest to recover the said assets.” Yesterday, he said the country had design efficient tax collection systems that make government agencies more accountable to people to.

Late last year, a report from Global Financial Integrity, “Illicit Financial Flows from the Developing World 2001-2010,” found that the developing world lost $5.86 trillion in illicit financial flows from 2001-2010

“The fight against money laundering has however been given new impetus, as part of anti-corruption initiatives but specifically in the wake of declining levels of aid from developed countries,” said Jean Persme from the World Bank .