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New team set up to review law on dirty money

By Frankline Sunday | March 25th 2019

Some of the fake $693mn and 369 million Euros recovered from a Cameroonian and a Niger national arrested in Nairobi on Januray 18, 2016. [Dennis Okeyo, Standard]

The Government has formed a task force to develop a new policy to fight money laundering and illicit finance in the country.

This comes as authorities continue to investigate billions of shillings in fake currency discovered in multiple cases across the country.

“The task force will undertake a national risk assessment on money laundering and terrorism financing, identifying and assessing the level, trends and threats to the country,” said Treasury Cabinet Secretary Henry Rotich in a gazette notice last week.

The team will draw membership from 30 institutions and departments, including the Capital Markets Authority, Kenya Bankers Association, Directorate of Criminal Investigations, Kenya Revenue Authority, Kenya Wildlife Service, the Immigration Department and the NGO Coordination Board.

It will also prepare a report and a national strategy on combating money laundering and terrorist financing by the end of March 2020, making legislative and administrative recommendations to address any gaps in the country’s financial legislation.

The team will also determine the vulnerability of financial institutions and designated non-financial businesses and professions to money laundering and terrorism financing.

Fake currency

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The new development comes just a week after police reportedly discovered Sh2 billion in fake currency in a safety deposit box at Barclays Bank’s Queens Way branch in Nairobi.

Police said four suspects who were arrested are part of an international racket targeting investors and politicians with false reports on investment opportunities while using the fake cash as sureties. 

Following the incident, Barclays Bank said it was reviewing its policies on the use of safe deposit boxes.

“Whilst we have operated the safe deposit box service in line with local and global regulatory requirements, we recognise the emergence of new financial crime risks associated with the use of this service,” said Barclays Bank Kenya Chief Executive Jeremy Awori in a statement. 

“Therefore, as an extra precaution, we have taken a decision not to take any new safe deposit boxes and are working with our clients to review the existing safe deposit boxes.”

The incident has rekindled concern over commercial banks’ adherence to existing anti-money laundering legislation such as the Proceeds of Crime and Anti-Money Laundering Act, 2009 that require banks to flag suspicious transactions and have detailed knowledge of their clients.

Last year, the Central Bank of Kenya (CBK) fined five banks - Kenya Commercial Bank, Equity, Stanchart, Co-operative and Diamond Trust Bank (DTB) a total of Sh392.5 million for failing to flag suspicious transactions which were allegedly part of Sh8billion embezzled from the National Youth Service (NYS). Last month, a manager at DTB was also charged with failing to report financial transactions linked to perpetrators of the terrorist attack at the 14 Riverside office complex on January 15 this year where more than 20 people lost their lives.

The task force comes just a month after Parliament sought to reverse anti-money laundering laws that require customers to reveal the source and intended use of large funds as well as provisions requiring banks to flag transfers of more than Sh1 million.

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