‘Operation Linda Nchi’ should check illicit financial flows too - Daily Nation

‘Operation Linda Nchi’ should check illicit financial flows too

Wednesday March 20 2019

Al-Shabaab

Al-Shabaab fighters perform a drill in Somalia on February 13, 2012. Their activities are funded through illicit funds. PHOTO | AFP 

By MICHAEL KURIA
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In the aftermath of Dusit, Kenyans were mortified by the seeming ease with which the extremists and their enablers could identify and exploit oversight gaps in popular cash transfer systems to facilitate their horrific act.

It appears they knew the system’s vulnerabilities better than the state regulators and merchants. They could defeat it and move large amounts to operatives undetected. This is not unusual.

They have to be adept at the acquisition, movement, hiding and use of money and operating in the formal and informal economies undetected.

Money is the glue that holds everything together for these groups. They have to buy weapons, pay fighters, create a welfare fund for families of dead fighters, buy food and pharmaceuticals, purchase and fuel vehicles and obtain communication equipment, apparel and even stationery.

THREAT ACTORS

Without perfecting the art of obtaining and moving money secretly, they would be unable to do anything.

It is therefore incredibly important for those charged with the responsibility of deterring terrorists to understand their financial dynamics and disrupt their terrorism financing methods.

The term of art is “threat finance”. Lumping together all the methods, this is the financing of illicit economic activity by “threat actors” such as terrorist organisations, militant groups, organised crime syndicates and non-state armed groups.

Some of these methods may even be antithetical to the group’s stated mission. For example, Al-Shabaab markets itself as a religious extremist group seeking the establishment of a conservative theocracy.

BUSINESS MODEL

However, there has been reports that in the countries within which it operates, it trafficks in narcotics and runs brothels to raise funds as well as gather information from clients, some of whom may be state officers. It is hard to see how the pursuit of a theocracy is consistent with such vices.

Many years ago, I was in a team investigating a logistics company involved in the clearing and forwarding business within an East African seaport.

Its business model was simple: Blackmail, corrupt, bribe and threaten its way into tenders, then divert whatever was meant to be shipped into the local market.

It turned out later that the foreigner owner, who was part of his country’s security structure, holding a commission in its military, was involved in extensive fraud and theft in several neighbouring countries while funnelling the proceeds of crime back home.

At the time, it didn’t occur to me that this was not an isolated case.

OVERSIGHT

There are many other methods in the Horn of Africa region such as wildlife poaching, smuggling of sugar and charcoal, running fake charities to collect funds, running legitimate businesses like shops through fronts, currency counterfeiting, fraud and theft of public funds, piracy and bank robberies.

The methods are legion and as many as there are extremist groups. If it makes easy money, you can bet it is of interest to them. But they all have a chokepoint: The groups must move the funds from where they are obtained to where they are needed.

While these groups can use traditional, trust-based systems such as the Indian Hundi system or the Hawala, prevalent in Somalia, there will always be a point at which they make use of the formal ones.

CORRUPTION

And if the oversight mechanisms to detect and prevent transmission of funds to proscribed entities are guarded by people trained and skilled in anti-threat finance and gaps are identified early and remediated, this reduces the operating space for them.

But Kenya cannot hope to win the war on terror without addressing the endemic corruption. First, because the proceeds of corruption can be redirected to financing terrorism.

Corruption is really the deliberate degradation and weakening of state agencies to prevent them from identifying, interdicting and punishing irregular or criminal activities.

A public officer who has stolen billions of taxpayers’ funds will use his office to prevent the police from detecting his crimes or the banks from flagging the transactions as suspicious and corrupt law enforcers, prosecutors and judicial officers to protect himself.

PANDORA'S BOX

The opportunities created by the selfish and destructive actions will be identified by violent extremists and used to harm Kenyans. He has cleared a trail to be followed by people as evil, if not more evil, as he is.

It is a betrayal to allow the same extremists KDF is fighting in Somalia to operate with near-impunity here, or corrupt individuals to create conditions that aid the enemy.

‘Operation Linda Nchi’ must have a domestic front — a war to counter threat finance and constrain the operating space of financial criminals. Without money, Al-Shabaab can’t field fighters. It is that simple.

Mr Kuria is a risk consultant specialising in the detection, prevention and disruption of transnational financial crime. [email protected]

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