_________________________________________________________
US State Dept Narcotics Report 2012 (introduction):
The trafficking of narcotics in and through Kenya is a major and growing
problem that has permeated all strata of the society. Narcotics usage is
spreading throughout the country from its original hubs in Nairobi and
along the coast. According to a 2011 estimate, the number of injecting
drug users in Coast Province alone is reportedly between 40,000 and
60,000. The drug menace has serious ramifications for the nation’s
health, security, and stability.
Kenya is a significant transit country for a host of illegal narcotics,
including heroin and cocaine, with an increasing portion of the trade
being consumed domestically. Imports of precursor chemicals are on the
increase, both for transshipment and local production of narcotics and
psychotropic substances. Cannabis and miraa (khat) are grown
domestically for both local use and export.
Stemming this flow of narcotics is an enormous challenge. Narcotics-
trafficking is tied directly to the prevailing culture of impunity that has
pervaded the senior political and business classes in Kenya since
independence. Kenya’s leaders profess strong support for
counternarcotics efforts, but this rhetoric has not translated into robust
interdiction and prosecution of drug kingpins. Kenya’s law enforcement
authorities at best lack the institutional capacity to successfully
investigate and prosecute serious narcotics cases. At worst, its officers
are complicit in the trade.
Kenya is a party to the 1988 UN Drug Convention.
For Full report, click here
_________________________________________________________
US State Dept Trafficking in Persons Report 2011 (introduction):
(Tier 2)
Kenya is a source, transit, and destination country for men, women, and
children subjected to forced labor and sex trafficking. Within the country,
Kenyan children are forced into domestic servitude, sex trafficking –
including involvement in the coastal sex tourism industry – and labor in
agriculture (including on flower plantations), fishing, cattle herding, street
vending, and bars. Traffickers, who gain poor families’ trust through
familial, tribal, or religious ties, fraudulently recruit children through
offers to raise and educate them and women through offers to place
them in lucrative employment. Kenyan men, women, and children
voluntarily migrate to other East African nations, Europe, and the Middle
East – particularly Saudi Arabia – in search of employment, where they
are trafficked into domestic servitude, massage parlors and brothels,
and forced manual labor, including in the construction industry. Children
from Burundi, Ethiopia, Rwanda, Somalia, Tanzania, and Uganda are
subjected to forced labor and sex trafficking in Kenya. Chinese, Indian,
and Pakistani women reportedly transit Nairobi en route to exploitation in
Europe’s sex trade.
The Government of Kenya does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. During the reporting period, the government
enacted comprehensive anti-trafficking legislation and convicted and
punished two trafficking offenders. It expanded the reach and
effectiveness of its hotline, launched a campaign against child trafficking,
provided legal representation for child sex trafficking victims, and
established an anti-trafficking office in the Ministry of Gender, Children,
and Social Development. It failed, however, to finalize or implement its
national plan of action, address trafficking complicity among law
enforcement officials, or provide adequate anti-trafficking training to its
officials, including diplomats, police, labor inspectors, and children’s
officers.
For full report click here
_________________________________________________________
US State Dept Terrorism Report 2010
Overview: The Kenyan government demonstrated increased political will
to secure its borders, apprehend suspected terrorists, and cooperate
with regional allies and the international community to counter terrorism,
despite facing perennial challenges that limited its growth in
counterterrorism capabilities such as corruption, a lack of
counterterrorism law, and severe resource constraints. Arms smuggling,
reports of extremist recruiting within refugee camps and Kenyan cities,
and increased allegations of terrorist plotting, enhanced recognition
among government officials, the diplomatic community, and civil society
that Kenya remained vulnerable to terrorist attacks. The government
increased security along parts of the Kenya/Somalia border to stem the
flow of armed militants who routinely crossed into Kenya to obtain
supplies, funding, medical care, and recruits, but a lack of capacity and
coordination among border officials undermined these efforts.
Legislation and Law Enforcement: Despite an increased concern over
security and Kenya's strong counterterrorism partnership with regional
and international allies, the lack of comprehensive counterterrorism
legislation hindered Kenya's counterterrorism efforts. Existing laws did
not permit police to detain terrorist suspects and prosecute them
effectively. The government did not submit a revised version of
counterterrorism legislation that was defeated in 2006 and no progress
was made in 2010 by the Kenyan Parliament to pass counterterrorism
legislation.
The Prevention of Organized Crime Law – unanimously adopted by
Parliament in July – allows authorities to designate groups as criminal
organizations, but does not explicitly criminalize terrorist activities. In
October, the Kenyan government designated 33 groups as organized
illegal gangs, including al-Shabaab. The broad definition of membership
in an organized crime group probably will help Kenyan authorities detain,
charge, and prosecute individuals associated with terrorist networks.
In September, Jomo Kenyatta International Airport (JKIA) successfully
completed pilot testing for biometric upgrades to Kenya’s Personal
Identification Secure Comparison and Evaluation System (PISCES),
which was used at nine Kenyan ports of entry to identify suspect
travelers against a computerized Kenyan stop-list. JKIA’s processing of
travelers on entry and departure was the first to incorporate new PISCES
biometric features; Kenyan officials at JKIA made productive use of their
new capabilities.
Countering Terrorist Finance: On June 30, the Kenyan Anti-Money
Laundering Act became effective. The act provides mechanisms for
detecting and seizing proceeds of money laundering, including the
establishment of a Financial Intelligence Unit (FIU). Kenya’s FIU did not
become operational in 2010, however. Kenya was a member of the
Eastern and South African Anti Money Laundering Group, a Financial
Action Task Force-style regional body.
Regional and International Cooperation: Kenyan law enforcement
agencies worked closely with the international community to increase
their counterterrorism abilities and secure porous land borders as well
as address ongoing maritime security concerns. Kenyan authorities
cooperated with Uganda in the investigation of the Kampala bombing.
_________________________________________________________
Extracted from Letter of Intent extracted from IMF Report: Kenya: Third
Review Under the Three-Year Arrangement Under the Extended Credit
Facility and Request for Modification of Performance Criteria (April
2012): -
We have initiated work on amending our Central Bank Act in line with
requirements under the Constitution and plan to submit revisions to the
law to the National Assembly. We will intensify our efforts to combat
money laundering and terrorism finance in line with the action plan
agreed with the Financial Action Task Force. Following the appointment
of the Anti-Money Laundering (AML) Board in September 2011, we plan
to make the Financial Reporting Centre operational and to revise the
AML/CFT Guidelines for financial institutions registered with the Central
Bank to reflect the requirements of our AML Act.
Read Full Report
Links:
Worldwide AML Legislation (International Bar Association)
US State Dept Narcotics Report 2012 (introduction):
The trafficking of narcotics in and through Kenya is a major and growing
problem that has permeated all strata of the society. Narcotics usage is
spreading throughout the country from its original hubs in Nairobi and
along the coast. According to a 2011 estimate, the number of injecting
drug users in Coast Province alone is reportedly between 40,000 and
60,000. The drug menace has serious ramifications for the nation’s
health, security, and stability.
Kenya is a significant transit country for a host of illegal narcotics,
including heroin and cocaine, with an increasing portion of the trade
being consumed domestically. Imports of precursor chemicals are on the
increase, both for transshipment and local production of narcotics and
psychotropic substances. Cannabis and miraa (khat) are grown
domestically for both local use and export.
Stemming this flow of narcotics is an enormous challenge. Narcotics-
trafficking is tied directly to the prevailing culture of impunity that has
pervaded the senior political and business classes in Kenya since
independence. Kenya’s leaders profess strong support for
counternarcotics efforts, but this rhetoric has not translated into robust
interdiction and prosecution of drug kingpins. Kenya’s law enforcement
authorities at best lack the institutional capacity to successfully
investigate and prosecute serious narcotics cases. At worst, its officers
are complicit in the trade.
Kenya is a party to the 1988 UN Drug Convention.
For Full report, click here
_________________________________________________________
US State Dept Trafficking in Persons Report 2011 (introduction):
(Tier 2)
Kenya is a source, transit, and destination country for men, women, and
children subjected to forced labor and sex trafficking. Within the country,
Kenyan children are forced into domestic servitude, sex trafficking –
including involvement in the coastal sex tourism industry – and labor in
agriculture (including on flower plantations), fishing, cattle herding, street
vending, and bars. Traffickers, who gain poor families’ trust through
familial, tribal, or religious ties, fraudulently recruit children through
offers to raise and educate them and women through offers to place
them in lucrative employment. Kenyan men, women, and children
voluntarily migrate to other East African nations, Europe, and the Middle
East – particularly Saudi Arabia – in search of employment, where they
are trafficked into domestic servitude, massage parlors and brothels,
and forced manual labor, including in the construction industry. Children
from Burundi, Ethiopia, Rwanda, Somalia, Tanzania, and Uganda are
subjected to forced labor and sex trafficking in Kenya. Chinese, Indian,
and Pakistani women reportedly transit Nairobi en route to exploitation in
Europe’s sex trade.
The Government of Kenya does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. During the reporting period, the government
enacted comprehensive anti-trafficking legislation and convicted and
punished two trafficking offenders. It expanded the reach and
effectiveness of its hotline, launched a campaign against child trafficking,
provided legal representation for child sex trafficking victims, and
established an anti-trafficking office in the Ministry of Gender, Children,
and Social Development. It failed, however, to finalize or implement its
national plan of action, address trafficking complicity among law
enforcement officials, or provide adequate anti-trafficking training to its
officials, including diplomats, police, labor inspectors, and children’s
officers.
For full report click here
_________________________________________________________
US State Dept Terrorism Report 2010
Overview: The Kenyan government demonstrated increased political will
to secure its borders, apprehend suspected terrorists, and cooperate
with regional allies and the international community to counter terrorism,
despite facing perennial challenges that limited its growth in
counterterrorism capabilities such as corruption, a lack of
counterterrorism law, and severe resource constraints. Arms smuggling,
reports of extremist recruiting within refugee camps and Kenyan cities,
and increased allegations of terrorist plotting, enhanced recognition
among government officials, the diplomatic community, and civil society
that Kenya remained vulnerable to terrorist attacks. The government
increased security along parts of the Kenya/Somalia border to stem the
flow of armed militants who routinely crossed into Kenya to obtain
supplies, funding, medical care, and recruits, but a lack of capacity and
coordination among border officials undermined these efforts.
Legislation and Law Enforcement: Despite an increased concern over
security and Kenya's strong counterterrorism partnership with regional
and international allies, the lack of comprehensive counterterrorism
legislation hindered Kenya's counterterrorism efforts. Existing laws did
not permit police to detain terrorist suspects and prosecute them
effectively. The government did not submit a revised version of
counterterrorism legislation that was defeated in 2006 and no progress
was made in 2010 by the Kenyan Parliament to pass counterterrorism
legislation.
The Prevention of Organized Crime Law – unanimously adopted by
Parliament in July – allows authorities to designate groups as criminal
organizations, but does not explicitly criminalize terrorist activities. In
October, the Kenyan government designated 33 groups as organized
illegal gangs, including al-Shabaab. The broad definition of membership
in an organized crime group probably will help Kenyan authorities detain,
charge, and prosecute individuals associated with terrorist networks.
In September, Jomo Kenyatta International Airport (JKIA) successfully
completed pilot testing for biometric upgrades to Kenya’s Personal
Identification Secure Comparison and Evaluation System (PISCES),
which was used at nine Kenyan ports of entry to identify suspect
travelers against a computerized Kenyan stop-list. JKIA’s processing of
travelers on entry and departure was the first to incorporate new PISCES
biometric features; Kenyan officials at JKIA made productive use of their
new capabilities.
Countering Terrorist Finance: On June 30, the Kenyan Anti-Money
Laundering Act became effective. The act provides mechanisms for
detecting and seizing proceeds of money laundering, including the
establishment of a Financial Intelligence Unit (FIU). Kenya’s FIU did not
become operational in 2010, however. Kenya was a member of the
Eastern and South African Anti Money Laundering Group, a Financial
Action Task Force-style regional body.
Regional and International Cooperation: Kenyan law enforcement
agencies worked closely with the international community to increase
their counterterrorism abilities and secure porous land borders as well
as address ongoing maritime security concerns. Kenyan authorities
cooperated with Uganda in the investigation of the Kampala bombing.
_________________________________________________________
Extracted from Letter of Intent extracted from IMF Report: Kenya: Third
Review Under the Three-Year Arrangement Under the Extended Credit
Facility and Request for Modification of Performance Criteria (April
2012): -
We have initiated work on amending our Central Bank Act in line with
requirements under the Constitution and plan to submit revisions to the
law to the National Assembly. We will intensify our efforts to combat
money laundering and terrorism finance in line with the action plan
agreed with the Financial Action Task Force. Following the appointment
of the Anti-Money Laundering (AML) Board in September 2011, we plan
to make the Financial Reporting Centre operational and to revise the
AML/CFT Guidelines for financial institutions registered with the Central
Bank to reflect the requirements of our AML Act.
Read Full Report
Links:
Worldwide AML Legislation (International Bar Association)
|
|
FATF Statement re AML Strategic Deficiencies:
Date: 16 February 2012
Despite Kenya’s high-level political commitment to work with the
FATF and ESAAMLG to address its strategic AML/CFT
deficiencies, Kenya has not made sufficient progress in
implementing its action plan, and certain strategic AML/CFT
deficiencies remain. Kenya should work on addressing these
deficiencies, including by: (1) adequately criminalising money
laundering and terrorist financing (Recommendation 1 and
Special Recommendation II); (2) ensuring a fully operational and
effectively functioning Financial Intelligence Unit
(Recommendation 26); (3) establishing and implementing an
adequate legal framework for identifying and freezing terrorist
assets (Special Recommendation III); and (4) implementing
effective, proportionate and dissuasive sanctions in order to deal
with natural or legal persons that do not comply with the national
AML/CFT requirements (Recommendation 17). The FATF
welcomes the adoption of the ESAAMLG mutual evaluation report
and will work with Kenya in light of the further deficiencies
identified in the report. The FATF encourages Kenya to address
its remaining deficiencies and continue the process of
implementing its action plan, including by implementing the AML
legislation and setting up its FIU
____________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2012:
Kenya is the largest financial center in East Africa, and its banking
and financial sectors are growing in sophistication. As a regional
financial and trade center for Eastern, Central, and the Horn of
Africa, Kenya’s economy has large formal and informal sectors;
and it remains vulnerable to money laundering and other financial
fraud. Reportedly, Kenya’s financial system may be laundering
over $100 million each year, although lack of regulation and
limited records make quantifying the value difficult.
Money laundering/terrorist financing activity derives from both
domestic and foreign criminal activity. Kenya is a transit point for
international drug traffickers. The laundering of funds derived
from corruption, smuggling, and other financial crimes is a
substantial problem. Its proximity to Somalia makes Kenya an
attractive and likely destination for the laundering of piracy-
related proceeds and a conduit for terrorism-related funds. There
is a black market for smuggled goods in Kenya, which serves as a
major transit country for Uganda, Tanzania, Rwanda, Burundi,
eastern Democratic Republic of Congo, Somalia, and South
Sudan. Goods marked for transit to these northern corridor
countries avoid Kenyan customs duties, but authorities
acknowledge they are often sold in Kenya. Many entities in Kenya
are involved in exporting and importing goods, including nonprofit
entities. Trade-based money laundering is a problem in Kenya,
and traded commodities are often used to provide counter-
valuation in regional hawala networks.
In addition to banks, wire services, and other formal channels that
act as depository institutions and execute funds transfers, Kenya
also houses money/value transfer systems (MVTS) catering to
those who conduct cash-based business. Kenyan Somalis and
Somali expatriates, in particular the large Somali refugee
population, primarily use hawalas to send and receive remittances
internationally. Mobile money, using telecom networks for cash
and value transfers, called M-Pesa, is an increasingly large
component of the Kenyan financial sector.
There are questions concerning Kenya’s political will to address
money laundering and terrorist financing. In June and October
2011, Kenya was included in the Financial Action Task Force
(FATF) Public Statement for its lack of progress on
adopting/implementing its action plan to improve its AML/CFT
regime despite over a year of targeted engagement by the FATF.
For additional information focusing on terrorism financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: Yes
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: All crimes
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
KYC covered entities: Banks and institutions accepting repayable
funds from the public; lending institutions, factors, and commercial
financiers; financial leasing firms; transferors of funds or value, by
any means, including both formal and informal channels; issuers
and managers of credit and debit cards, checks, traveler’s
checks, money orders and banker’s drafts, and electronic money;
financial guarantors; traders of money market instruments,
including derivatives, foreign exchange, currency exchange,
interest rate and index funds, transferable securities, and
commodity futures; participation in securities issues and the
provision of financial services related to such issues; portfolio
managers; safekeeping, management, and administration of cash
or liquid securities; underwriting and placement of life insurance
and other investment related insurance; casinos; real estate
agencies; accountants; and dealers in precious metals and stones
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 37 – January through
October 2011
Number of CTRs received and time frame: None
STR covered entities: Banks and institutions accepting repayable
funds from the public; lending institutions, factors, and commercial
financiers; financial leasing firms; transferors of funds or value, by
any means, including both formal and informal channels; issuers
and managers of credit and debit cards, checks, traveler’s
checks, money orders and banker’s drafts, and electronic money;
financial guarantors; traders of money market instruments,
including derivatives, foreign exchange, currency exchange,
interest rate and index funds, transferable securities, and
commodity futures; participation in securities issues and the
provision of financial services related to such issues; portfolio
managers; safekeeping, management, and administration of cash
or liquid securities; underwriting and placement of life insurance
and other investment related insurance; casinos; real estate
agencies; accountants; and dealers in precious metals and stones
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: None
Convictions: None
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Kenya is a member of the Eastern and Southern Africa Anti-
Money Laundering Group (ESAAMLG), a Financial Action Task
Force (FATF)-style regional body. Kenya’s most recent mutual
evaluation report can be found here: www.esaamlg.org
Enforcement and implementation issues and comments:
The Proceeds of Crime and Anti-Money Laundering Act
(POCAMLA), which came into force in June 2010, provides a legal
framework for regulation and enforcement as well as a framework
for compliance among most of Kenya’s financial and some of its
non-financial sectors; however, the law has not been
implemented, and authorities such as the Financial Reporting
Center (FRC), Kenya’s FIU, have yet to be established. Due to
Kenya’s lack of implementation, POCAMLA has never been used
to prosecute any crimes, nor have any charges been filed under
the POCAMLA, so the law remains untested.
The future FRC will issue official implementing regulations. In the
interim, the Central Bank of Kenya (CBK) has issued guidance
notes to commercial banks, non-bank financial institutions, and
mortgage finance companies about their responsibilities under
POCAMLA. In July 2011, guidance was issued on suspicious
transaction reporting. In September 2011, the CBK issued
guidance on combating terrorist financing, but as neither terrorism
nor terrorist financing is criminalized, this guidance is not binding.
In 2011, the CBK closed several foreign exchange bureaus for
failing to comply with new, more stringent standards.
The POCAMLA does not adequately address KYC measures
related to PEPs. With Kenya’s new constitution, PEPs are now
subject, for the first time, to financial disclosure requirements and
enhanced vetting procedures. Kenya does not actively collect
CTRs, though banks provide this data if asked.
The Government of Kenya cannot track transactions by MVTS
entities. The lack of regulation/supervision of this sector, coupled
with a lack of reporting from the obliged entities, contribute to the
vulnerability posed by this sector. Tracking, reporting, and
investigating suspicious transactions related to the MVTS are
more difficult for the Kenyan authorities than those using the
formal financial sector.
Kenyan law enforcement authorities lack the institutional capacity,
investigative skill, and resources to conduct complex financial
investigations, and a number of bureaucratic impediments present
challenges. To demand bank account records or to seize an
account, the police must present evidence linking the deposits to
a criminal violation and obtain a court warrant. The confidentiality
of this process is difficult to maintain, and because of leaks,
account holders are tipped off about the investigations and then
move their accounts or contest the warrants. However, the Kenya
Revenue Authority has made recent strides in increasing its
internal monitoring and collection procedures. With the
implementation of Kenya’s constitution, there are significant
judicial reforms underway. The Office of the Public Prosecutor is
organizing a special unit to address financial crimes and is
collaborating with the Ethics and Anti-Corruption Commission to
investigate illicit financial flows.
The POCAMLA does not criminalize terrorist financing; the draft
anti-terrorism bill addressing terrorist financing languishes in
Parliament, where it has been for years. POCAMLA provides for
legal mechanisms to freeze or seize criminal accounts; however,
the law has not yet been used to do this. Kenya does not have a
mechanism or legal authority to freeze or seize accounts used for
terrorist financing. In November 2011, the President signed the
Mutual Legal Assistance Act. This Act will allow increased
cooperation with its international partners. Although it had
languished for a number of years, the Act became operational on
December 2 and was gazetted on December 9, 2011
Date: 16 February 2012
Despite Kenya’s high-level political commitment to work with the
FATF and ESAAMLG to address its strategic AML/CFT
deficiencies, Kenya has not made sufficient progress in
implementing its action plan, and certain strategic AML/CFT
deficiencies remain. Kenya should work on addressing these
deficiencies, including by: (1) adequately criminalising money
laundering and terrorist financing (Recommendation 1 and
Special Recommendation II); (2) ensuring a fully operational and
effectively functioning Financial Intelligence Unit
(Recommendation 26); (3) establishing and implementing an
adequate legal framework for identifying and freezing terrorist
assets (Special Recommendation III); and (4) implementing
effective, proportionate and dissuasive sanctions in order to deal
with natural or legal persons that do not comply with the national
AML/CFT requirements (Recommendation 17). The FATF
welcomes the adoption of the ESAAMLG mutual evaluation report
and will work with Kenya in light of the further deficiencies
identified in the report. The FATF encourages Kenya to address
its remaining deficiencies and continue the process of
implementing its action plan, including by implementing the AML
legislation and setting up its FIU
____________________________________________________
Sanctions:
None applicable
____________________________________________________
Offshore Jurisdiction Blacklists:
Information unavailable.
____________________________________________________
US State Department Money Laundering Report - 2012:
Kenya is the largest financial center in East Africa, and its banking
and financial sectors are growing in sophistication. As a regional
financial and trade center for Eastern, Central, and the Horn of
Africa, Kenya’s economy has large formal and informal sectors;
and it remains vulnerable to money laundering and other financial
fraud. Reportedly, Kenya’s financial system may be laundering
over $100 million each year, although lack of regulation and
limited records make quantifying the value difficult.
Money laundering/terrorist financing activity derives from both
domestic and foreign criminal activity. Kenya is a transit point for
international drug traffickers. The laundering of funds derived
from corruption, smuggling, and other financial crimes is a
substantial problem. Its proximity to Somalia makes Kenya an
attractive and likely destination for the laundering of piracy-
related proceeds and a conduit for terrorism-related funds. There
is a black market for smuggled goods in Kenya, which serves as a
major transit country for Uganda, Tanzania, Rwanda, Burundi,
eastern Democratic Republic of Congo, Somalia, and South
Sudan. Goods marked for transit to these northern corridor
countries avoid Kenyan customs duties, but authorities
acknowledge they are often sold in Kenya. Many entities in Kenya
are involved in exporting and importing goods, including nonprofit
entities. Trade-based money laundering is a problem in Kenya,
and traded commodities are often used to provide counter-
valuation in regional hawala networks.
In addition to banks, wire services, and other formal channels that
act as depository institutions and execute funds transfers, Kenya
also houses money/value transfer systems (MVTS) catering to
those who conduct cash-based business. Kenyan Somalis and
Somali expatriates, in particular the large Somali refugee
population, primarily use hawalas to send and receive remittances
internationally. Mobile money, using telecom networks for cash
and value transfers, called M-Pesa, is an increasingly large
component of the Kenyan financial sector.
There are questions concerning Kenya’s political will to address
money laundering and terrorist financing. In June and October
2011, Kenya was included in the Financial Action Task Force
(FATF) Public Statement for its lack of progress on
adopting/implementing its action plan to improve its AML/CFT
regime despite over a year of targeted engagement by the FATF.
For additional information focusing on terrorism financing, please
refer to the Department of State’s Country Reports on Terrorism,
which can be found here: http://www.state.gov/j/ct/rls/crt/
Do Financial Institutions engage in currency transactions related
to international narcotics trafficking that include significant
amounts of US currency; currency derived from illegal sales in the
U.S.; or that otherwise significantly affect the U.S.: Yes
Criminalization of Money Laundering:
“All serious crimes” approach or “list” approach to predicate
crimes: All crimes
Legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: NO
Domestic: NO
KYC covered entities: Banks and institutions accepting repayable
funds from the public; lending institutions, factors, and commercial
financiers; financial leasing firms; transferors of funds or value, by
any means, including both formal and informal channels; issuers
and managers of credit and debit cards, checks, traveler’s
checks, money orders and banker’s drafts, and electronic money;
financial guarantors; traders of money market instruments,
including derivatives, foreign exchange, currency exchange,
interest rate and index funds, transferable securities, and
commodity futures; participation in securities issues and the
provision of financial services related to such issues; portfolio
managers; safekeeping, management, and administration of cash
or liquid securities; underwriting and placement of life insurance
and other investment related insurance; casinos; real estate
agencies; accountants; and dealers in precious metals and stones
Suspicious Transaction Reporting (STR) Requirements:
Number of STRs received and time frame: 37 – January through
October 2011
Number of CTRs received and time frame: None
STR covered entities: Banks and institutions accepting repayable
funds from the public; lending institutions, factors, and commercial
financiers; financial leasing firms; transferors of funds or value, by
any means, including both formal and informal channels; issuers
and managers of credit and debit cards, checks, traveler’s
checks, money orders and banker’s drafts, and electronic money;
financial guarantors; traders of money market instruments,
including derivatives, foreign exchange, currency exchange,
interest rate and index funds, transferable securities, and
commodity futures; participation in securities issues and the
provision of financial services related to such issues; portfolio
managers; safekeeping, management, and administration of cash
or liquid securities; underwriting and placement of life insurance
and other investment related insurance; casinos; real estate
agencies; accountants; and dealers in precious metals and stones
Money Laundering Criminal Prosecutions/Convictions:
Prosecutions: None
Convictions: None
Records exchange mechanism:
With U.S.: MLAT: NO Other mechanism: YES
With other governments/jurisdictions: YES
Kenya is a member of the Eastern and Southern Africa Anti-
Money Laundering Group (ESAAMLG), a Financial Action Task
Force (FATF)-style regional body. Kenya’s most recent mutual
evaluation report can be found here: www.esaamlg.org
Enforcement and implementation issues and comments:
The Proceeds of Crime and Anti-Money Laundering Act
(POCAMLA), which came into force in June 2010, provides a legal
framework for regulation and enforcement as well as a framework
for compliance among most of Kenya’s financial and some of its
non-financial sectors; however, the law has not been
implemented, and authorities such as the Financial Reporting
Center (FRC), Kenya’s FIU, have yet to be established. Due to
Kenya’s lack of implementation, POCAMLA has never been used
to prosecute any crimes, nor have any charges been filed under
the POCAMLA, so the law remains untested.
The future FRC will issue official implementing regulations. In the
interim, the Central Bank of Kenya (CBK) has issued guidance
notes to commercial banks, non-bank financial institutions, and
mortgage finance companies about their responsibilities under
POCAMLA. In July 2011, guidance was issued on suspicious
transaction reporting. In September 2011, the CBK issued
guidance on combating terrorist financing, but as neither terrorism
nor terrorist financing is criminalized, this guidance is not binding.
In 2011, the CBK closed several foreign exchange bureaus for
failing to comply with new, more stringent standards.
The POCAMLA does not adequately address KYC measures
related to PEPs. With Kenya’s new constitution, PEPs are now
subject, for the first time, to financial disclosure requirements and
enhanced vetting procedures. Kenya does not actively collect
CTRs, though banks provide this data if asked.
The Government of Kenya cannot track transactions by MVTS
entities. The lack of regulation/supervision of this sector, coupled
with a lack of reporting from the obliged entities, contribute to the
vulnerability posed by this sector. Tracking, reporting, and
investigating suspicious transactions related to the MVTS are
more difficult for the Kenyan authorities than those using the
formal financial sector.
Kenyan law enforcement authorities lack the institutional capacity,
investigative skill, and resources to conduct complex financial
investigations, and a number of bureaucratic impediments present
challenges. To demand bank account records or to seize an
account, the police must present evidence linking the deposits to
a criminal violation and obtain a court warrant. The confidentiality
of this process is difficult to maintain, and because of leaks,
account holders are tipped off about the investigations and then
move their accounts or contest the warrants. However, the Kenya
Revenue Authority has made recent strides in increasing its
internal monitoring and collection procedures. With the
implementation of Kenya’s constitution, there are significant
judicial reforms underway. The Office of the Public Prosecutor is
organizing a special unit to address financial crimes and is
collaborating with the Ethics and Anti-Corruption Commission to
investigate illicit financial flows.
The POCAMLA does not criminalize terrorist financing; the draft
anti-terrorism bill addressing terrorist financing languishes in
Parliament, where it has been for years. POCAMLA provides for
legal mechanisms to freeze or seize criminal accounts; however,
the law has not yet been used to do this. Kenya does not have a
mechanism or legal authority to freeze or seize accounts used for
terrorist financing. In November 2011, the President signed the
Mutual Legal Assistance Act. This Act will allow increased
cooperation with its international partners. Although it had
languished for a number of years, the Act became operational on
December 2 and was gazetted on December 9, 2011
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| KENYA |
| KnowYourCountry |
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| Last Updated: 30 April 2012 |