Abdulsamad Ali
19 August 2008
Nairobi — Eastern and Southern African countries are vulnerable to money laundering because of their mainly cash-based economies, Central Bank of Kenya governor Prof Njuguna Ndung'u has said.
Money laundering is further aggravated by porous borders and weak institutions for enforcements, he said adding that though much had been done to fight the vice, it was not enough.
Money laundering helps to finance illegal activities such as terrorism and remains one of the ways that money is transferred.
"The challenges we as a region face are multifaceted, but we remain resolutely committed to fighting the double evils of laundering and financing of terrorism," said Prof Ndung'u.
He was speaking at the Whitesands Hotel when he officially opened the five-day Eastern and Southern Africa Money Laundering Group 8th Council of ministers and the 16th Task force of senior officials meeting.
The grouping was established in 1999 and comprises 14 member countries with a vision to create a strong and dynamic regional body committed to eradicating money laundering and terrorist financing in the region.
He said he was acutely aware that money laundering is a threat to both the integrity and stability of the banking sector and forex bureaus.
"Further, with increased globalisation, our banking systems are increasingly under close scrutiny by our international trading partners particularly with regard to anti money laundering legal and regulatory frameworks," he said.
He said Kenya was in the process of enacting a comprehensive anti-money laundering legislation. Even without the legislation the bank has played a key role in ensuring systems to combat abuse of the banking sector by criminal elements are in place.
Rapidly changing technologies and the introduction of new financial products remains a major challenge which requires financial institutions and regulatory bodies to constantly remain vigilant of possible abuse by criminals.
Kenyan banks have faced challenges in implementing due diligence requirements because of the changing environment, he said.
"In particular the requirements have been difficult to implement particularly in rural areas and even peri-urban areas," he said.
For instance, he said, the requirement to verify the physical address of a customer has been a challenge.
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