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Kenya: Fix Loopholes in Anti-Money Laundering Bill
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The Nation (Nairobi)
OPINION
11 May 2008
Posted to the web 12 May 2008
Owino Opondo
Nairobi
They are a common feature in almost every society on earth; those overnight millionaires without known employment or businesses.
And they lead profligate lives. One would think planting cash was their profession. But, nay, most of them indulge in criminal activities such as drug pushing, pyramid investment schemes, corruption, computer fraud, child trafficking and gun running.
It is money got from such unlawful ways that they clean (launder) by concealing sources, then transfer to local and foreign banks or legitimate businesses.
Kenya's economy is still reeling from the devastating effects of last year when several pyramid schemes collapsed with depositors' billions of shillings.
It was not an isolated event the world had seen in recent years. In the Philippines, for example, close to two million people invested in pyramid schemes, having been promised weekly returns as high as 60 per cent. The hapless investors poured in their pensions, cash from abroad, and even sold homes to increase personal stakes.
The schemes collapsed with about US$ 1.4 billion of investors' money, with their effects rippling over the entire country. Forced to repay the loans, police officers resorted to extortion while on patrol, while destitute investors turned to criminal activities.
In Albania, pyramid schemes collapsed between 1996 and 1997 when the investments accounted to a half of the country's Gross Domestic Product. Big players of the schemes transferred out of the country more than 93 per cent (US$500 million) of its deposits.
The collapse of the schemes caused a civil war in which 2,000 people were killed and 3.5 million others displaced.
In Kenya, experts have argued that some of the economic scandals that have taken place such as Goldenberg and Anglo Leasing were examples of high-level money laundering.
It is for this reason that a number of organisations have been rooting for legislation to fight money laundering. They include the Centre for Governance and Development, the International Commission of Jurists and some members of the Parliamentary Initiatives Network.
The government first introduced the Proceeds of Crime and Anti-Money Laundering Bill in 2006 but it lapsed after the First Reading (formal introduction). It was re-tabled last year but it was frozen with the end of the life of the Ninth Parliament last November.
I sighed with relief when MPs concluded debate on the Bill last Thursday upon its re-introduction, then referred it to two departmental committees for fine-tuning. The Bill awaits scrutiny by members of Finance and Trade committee on one hand, and those of Administration of Justice and Legal Affairs on the other.
It is instructive that some MPs already raised the red flag over the Bill, saying it was the work of the USA and foreign multilateral donors. I leave that to the Finance minister Amos Kimunya to explain, but my take is that Kenya urgently needs a law to fight money laundering.
But first, the highlights of the Proceeds of Crime and Anti-Money Laundering Bill, 2008.
It has a number of clauses defining acts that will be deemed as money laundering, associated offences and property that will be seen as having been acquired through criminal activities. They shall include assisting criminals hide properties acquired unlawfully as well as aiding others to benefit from proceeds of crime.
If enacted, the Bill provides that it shall be a crime to acquire or possess proceeds of crime. Anyone who fails to report any suspicion regarding the proceeds of crime will have committed an offence. To knowingly transport, transmit, transfer or receive a monetary instrument or anything with the intention of committing an offence will be illegal.
Giving tips to suspects of money laundering or providing false information to officials or bodies regulating the Act shall be an offence. Transmitting more money or monetary instruments (travellers' cheques, personal cheques, bank cheques, money orders, investment securities, etc) into or out of Kenya shall be declared in a prescribed form at the point of entry or exit.
There are to be set up entities to implement the Bill if passed into law: The Financial Reporting Centre, the Anti-Money Laundering Advisory Committee, the Assets Recovery Agency, and the Criminal Assets Recovery Fund. The he Financial Reporting Centre is to identify proceeds of crime and fight money laundering, while Anti-Money Laundering Advisory Committee or of Financial Reporting Centre.
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The Assets Recovery Agency shall be a semi-autonomous outfit under the Attorney General, charged with the duty of recovering any proceeds of money laundering. It shall also administer the monies of Criminal Assets Recovery Fund.
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