Collapsed African supermarket chain part of international money laundering syndicate

What was until recently East Africa’s leading retailing chain, Nakumatt Supermarkets, is to be dissolved amidst revelations that it played a key role in an international money laundering syndicate.

Nakumatt’s role involved operating an innovative trade-based money laundering (TBML) scheme in which it was able to move cash around the syndicate’s global network of companies, completely out of sight of revenue collectors’ view.

TBML with a twist

The TBML scheme employed the conventional modus operandi of under- or over-invoicing so that cash could slip past revenue collectors without the apparent buyers and suppliers having to pay the full amount of taxes, duties or customs.

But Kenya-based Nakumatt’s TBML operations contained twist. Instead of transferring cash through conventional bank accounts that revenue officials could gain access to, the retailer paid money in and out of lawyers’ client accounts.

Legal protection

These accounts enjoy the highest legal protection under the principle of lawyer-client confidentiality, and are even exempted from compliance under Kenya’s Proceeds of Crime and Anti-Money Laundering Law.

The Kenya Revenue Authority meanwhile has no powers to place receiving orders on lawyers’ client accounts, so it is unlikely that any of Nakumatt’s creditors will be paid while the funds now running through the syndicates’ accounts remain beyond the taxman’s scrutiny.

Categories: Trade Based Financial crimes News

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