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Parliament finally passes Bill on money laundering

By | December 11th 2009

Parliament has finally passed a law to penalise money laundering.

The House passed the Proceeds of Crime and Anti-Money Laundering Bill, ending a four-year attempt.

The legislation was endorsed last evening after amendments moved by chairman of the Departmental Committee on Legal Affairs Abdikadir Mohammed.

Among the changes was removal of a clause making the Finance PS the automatic chair of the Anti-Money Laundering Advisory Board.

Instead the law gives any board member, including representatives of professional organisations, the opportunity to head the board tasked with advising the Assets Recovery Agency.

The new law provides for the offence of money laundering and introduces measures for combating the vice, identification, tracing, freezing, seizure and confiscation of the proceeds of crime.

Illicit activities

Money laundering refers to channelling funds acquired from illicit activities such as drug trafficking and arms trade through the formal financial system to make it appear to have been obtained genuinely.

Under the law, which awaits presidential assent, a Financial Reporting Centre to assist in the identification of the proceeds of crime will be established.

In addition, an Assets Recovery Agency, headed by a director, will be formed to trace and recover ill-gotten assets. The enactment comes in the backdrop of a recent US State Department report saying a staggering Sh7 billion earnings from drug trafficking are laundered in the country’s financial system annually.

Another report by a UK firm, Kroll Associates, hired by Government to track wealth acquired corruptly, detailed an estimated Sh130 billion was stashed in foreign accounts.

Kenya was classified as a major money laundering country in the report, piling up pressure on Government to enact the legislation.

Prime Minister Raila Odinga, while seconding the Bill presented by Deputy Prime Minister Uhuru Kenyatta, told members Kenya risked being labelled a pariah State.

Organised crimes

Nairobi Metropolitan Minister Njeru Githae welcomed the law, although it had been "watered down substantially."

Passage of the Bill establishes a legal regime to detect and investigate money and wealth accumulated from illegal sources such as organised crime and ploughed into the economy. It spells out powers by investigators to restrain or withhold assets under investigation to avoid their disappearance.

Assets of individuals convicted of money laundering will revert to the State.

cash transactions

Previous attempts to enact the law had been opposed, following claims it was a backdoor re-introduction of the punitive Anti-terrorism Bill, rejected six years ago.

The new law will disrupt organised criminals who use cash transactions to multiply wealth or seek to conceal ill-gotten money by mixing it with legitimate money.

Officials are allowed to search premises and people suspected of these crimes while the law outlines criminal sanctions for anyone who comes into contact with illegal wealth and money.

—By Peter Opiyo and Alex Ndegwa

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