Money launderers having a field day in Kenya

By Dann Okoth The country is again at the centre of attention because of money laundering.
This comes on the heels of the controversy over narcotics trafficking involving high-ranking Government officials and politicians whose sources of unexplained wealth have raised eyebrows.
With major socio-economic changes in the country, rising political temperatures and developments in neighbouring countries, money laundering has taken a new dimension.
Just recently, Charter House Bank was at centre of an investigation by the parliamentary Committee on Finance following accusations by the US Ambassador to Kenya Michael Ranneberger that it was involved in money laundering.
Corruption and lingering economic crimes have largely exacerbated the problem in the country even as it opens doors to investors some of them with questionable reputation. The fact that Kenya is ranked as the one the most corrupt countries in the world does not help matters.
For starters, money laundering consists of the concealment of assets generated by crime or used to commit offences.
Corruption in the country accounts for the largest amounts of illegally earned wealth, ahead of the illegal trade in narcotics and other forms of organised crimes. It is estimated that Sh600 billion held in foreign accounts by ten of Kenya’s political elite are proceeds of corruption.
Research shows that money laundering has gone hi-tech. Days when huge sums of money found there way into individuals’ bank account without a paperwork trail are gone.
Investigations by The Standard on Saturday reveals a complicated web of money laundering syndicate where legally registered companies are being used as conduits for channelling illegal money in and out of the country.
For instance, the launders enlist the name of an export/import company and pose as agents to cover up their activities. The company then purported to have delivered goods ordered by a certain individual.
Proxy businesses
The plot is so arranged such that a consignment of goods arrives or leaves the port of Mombasa and a clearing and forwarding company clears the cargo on behalf of the client. However, while what is paid for in the bank transaction by the ‘recipient abroad’ is perhaps gold or diamond, what may actually leave the port are tons of worthless flowers.
The reverse happens say when a container carrying light bulbs arrives in Mombasa and is paid for as farm machinery or fertilisers to the tune of hundreds of millions of shillings. The fact that well-connected individuals own most freight companies in Kenya makes them the perfect choices of the international fraudsters. The crooks have taken advantage of the malignant corruption among Kenya Revenue Authority staff, and inefficiency, lack of proper fiscal laws and the inherent corruption in the Government makes the country a soft target.
Since the collapse of the State of Somalia in 1991 and subsequent anarchy in the horn of African nation operatives of the Somali militia have transformed Kenya into their second home. The elaborate banking system has also attracted the insurgents who use it to circulate their money and finance their operations.
The emergency of piracy activities in the Gulf of Aden has worsened the scenario while demands for ransom has soared.
A huge chunk of this money, sources reveal, is used to fund terrorism and acquire property in strategic places.
There are suggestions that parts of Nairobi have now been annexed by elements believed be linked with the Al-Shabaab militia in Somalia.
Last year, the Government attempts to establish the source of the massive wealth by some individuals owning property in Nairobi came a cropper after it was termed racial profiling by some MPs.
The Anti-Corruption and Economics Crimes Act came into force in 2003, subsequently establishing the Kenya Anti-Corruption Commission, but investigating and prosecuting such crimes have proved difficult often claiming their victims in the name of anti-corruption Tsars and crusaders with a rider that corruption always fights back.