Kenya faces sanctions over failure to enact laws against terrorism

Kenya risks being blacklisted by an international coalition fighting terrorism due to lack of laws to curb money laundering and terrorism financing.

The Financial Action Task Force (FATF), the global standard setting body for anti-money laundering and combating the financing of terrorism (AML/CFT), says in a report that although Kenya has shown high-level political commitment to work with it and the Eastern and Southern Africa Anti-Money Laundering Group to address its deficiencies in the two areas, it has not made sufficient progress in implementing its action plan.

Now the body warns that if Kenya does not take significant actions by October 2012, it will call upon its members to apply countermeasures “proportionate to the risks associated with Kenya” in its June 2012 report.

These concerns are also said to have been raised by the US State Department just before the recent visit by Secretary of State Hillary Clinton.

According to a State Department statement, before Mrs Clinton’s visit, the US had raised concerns over lack of an adequate legal regime to fight money laundering and specifically laws criminalizing terrorism financing.

Ahead of Mrs Clinton’s visit, the US Department of Treasury official in charge of Terrorist Financing and Financial Crimes Luke Bronin was in the country and met with various leaders including the late Internal Security minister George Saitoti, his Finance counterpart Njeru Githae and the Central Bank Governor Njuguna Ndung’u.

It was Mr Bronin’s opinion that Kenya needed to put in place proper legislation.

Finance minister Njeru Githae, told the Daily Nation in an interview that Kenya had put in place the legal framework to fight money laundering.

“We have the Anti-Money Laundering Act in place and we have also taken other administrative measures like “know your customer” rules which make it mandatory for banks to monitor unusual activities in an account,” he said.

Mr Githae said the government had also established an anti-money laundering unit and seconded staff from different key departments to it.

“The only thing missing is the law criminalizing terrorism financing but the Cabinet has already approved the Suppression of Terrorism Bill and this law will be in place once Parliament approves the Bill,” he said.

Mr Githae said even in the absence of the law criminalizing terrorism financing, the government had put in place measures to curb the vice.

“We are 99 per cent compliant with criminalizing terrorism financing,” he said.

Kenya has been in the recent past on the spot over money laundering activities. The assets of three Kenyans, Mr Abubaker Shariff Ahmed, Mr Omar Awadh Omar and Mr Aboud Rogo Mohammed were frozen after they were listed in a United States government report over alleged links to Somalia’s militia group Al-Shabaab.

The three were blacklisted in an “executive order” signed by President Barack Obama.

It means the individuals cannot access their property in the US including bank accounts and real estate, among others.

Recently, it was revealed that money launders may have used the bank accounts of Kenya Planters Cooperative Union (KPCU) to bring in more than Sh210 billion.

KPCU accounts dating as far back as 2003, a period when the country was yet to tighten surveillance on money laundering, show that a group of well-connected individuals manipulated the union’s account to clean dirty money entering the country.

For instance, an unexplained transaction on February 13, 2004, shows that the union overdrew its account by Sh210 billion ($2.53 billion) from the bank.

Recent reports by the Central Bank of Switzerland and Transparency International show that Kenyans have stashed away Sh72 billion and Sh700 billion respectively in foreign accounts.