by Njoki Ndung’u

A potentially important and long overdue legislation, the Proceeds of Crime and Anti-Money Laundering Bill, was reintroduced in Parliament this week.

The Bill is of great significance. It seeks to tame money laundering by plugging the many gaps favour easy legitimisation of the proceeds of illegal and criminal trade. That the absence of relevant laws to make it harder to profit from such proceedings is abetting illicit activities is hard to doubt. As Finance Minister Uhuru Kenyatta correctly noted when moving the Government-sponsored Bill, the country will continue to be an unwitting laundry for dirty money unless it passes the law urgently.

Yet such concerns are not exactly new. With nudging from its development partners, the Government has been under considerable pressure to enact legislation to fight money laundering. This is informed by genuine fears the country could be a favourite funnel for sinking questionably acquired bounty into perfectly legitimate investments and thereby promoting crime as a rewarding enterprise. Indeed, the Bill moved on Tuesday was making its third comeback in Parliament. It was first introduced in 2006 but it lapsed after the formal introduction (First Reading). It was re-tabled the following year but was then shelved with the dissolution of the Ninth Parliament to pave way for the 2007 General Election.

The thrust of the intended legislation is to provide a legal framework that discourages money laundering by making it harder and punishing those caught in the act.

It defines the scope of money laundering and proposes three bodies: the Financial Reporting Centre, the Anti-Money Laundering Advisory Committee and the Asset Recovery Agency, that will help its implementation. Further, it stipulates stringent customers’ monitoring guidelines for banking institutions. The latter intention is to have banks on the alert for transactions that suggest ill-gotten cash and to report the same to relevant authorities.

There are good reasons to support the Bill. As its backers in Parliament have noted, for-profit crime is often serious business that transcends international boundaries. Many governments appreciate this fact and to insure themselves from the potential infiltration by dirty money, they have enacted domestic legislations that make it difficult to invest such money in their countries. Alternatively or in tandem with local laws, they have joined hands to domesticate international laws that frustrate money laundering. Thus Kenya is belatedly, though not for want of trying, attempting to join an important and necessary club.

The law is also good in other important aspects too. As proponents have noted, it could cure or at least mitigate a number of homegrown problems, chief among them big time corruption. Mega-corruption scandals are partly motivated by knowledge of the ease with which accrued personal gains could be laundered locally without attracting legal consequences. That and the comfort of investing the same in money-making enterprises that confer legitimacy and honour make such scams temptingly rewarding.

Besides corruption, there has also been a steady growth in other forms of local crime that is apparently abetted by the relatively easy process of legitimising the proceedings. Gangs that thrive in extortion are said to be making millions of money from the activities. This money is reportedly invested in large scale farming, houses and other ventures with capacity for yielding licit returns. This emboldens militias and other like-minded who see evidence of the stress-free living off crime. The same applies to drug pushers. Some of the swankiest private residences and housing estates are owned by suspected peddlers. As long as this is the case, crime becomes an attractive and tempting indulgence.

The urgency of this law is further exacerbated by the piracy menace in the Indian Ocean. It is common knowledge that a significant portion of the hefty ransoms paid for release of ships and cargo hijacked by Somali bandits is invested in Kenya. This flush cash has been cited as the main reason for abnormal rise in property prices in Nairobi and Mombasa. Thus by failing to have laws that discourage or make it difficult to plough back such funds, Kenya is inadvertently escalating sea piracy.

Noble as the Bill’s intentions are, there are however important gray areas and potentially controversial provisions that could imperil its broad acceptance in Parliament and among key stakeholders if not addressed and redressed. Notable among these is its failure to acknowledge and appropriately link money laundering to existing laws against "predicate" crimes. These include corruption, terrorism, drug and human trafficking, extortion and kidnappings among others. It is also silent on crime auxiliary to money laundering such as gun running and cattle rustling, etc.

Also worrying is the potential conflict between the need to respect lawyer-client privilege and the right to privacy, against the genuine concern to root out offenders hiding behind bank accounts held by their lawyers and trustees.

At the right stage of deliberation, it will be necessary to further address concerns over the appointment process and the composition of the proposed bodies that are intended to be pivotal to the Bill.

The potential of rogue officials of the same institutions or of criminally inclined bank employees could severely undermine the good intentions of the proposed law.