TBML vulnerabilities catalogued in new report on financial crime in Kenya

An extensive new report examining financial crime in Kenya provides details of several trade-based money laundering (TBML) vulnerabilities in the country’s natural resources sectors.

It also demonstrates how trade and Kenyan banks play a part in the country’s role facilitating illicit financial flows involving South Sudanese politically exposed persons (PEPs).

The report, Kenya Illicit Finance Risks and Assessment, was compiled from open source material by The Sentry, a US investigative and policy organisation that follows dirty money connected to African war criminals and transnational war profiteers and aims to shut them out of the international financial system.

Transhipment vulnerabilities

Kenya is highly susceptible to acting as a transhipment point for illicit trade and finance due to its rich store of natural resources, strong manufacturing and services sectors, and location acts as a strategic gateway between East and Central Africa and Europe, the Middle East, and Asia.

This means it is essential for Kenya to have effective and adequate anti-money laundering and counter financing of terrorism measures in place the report concludes.

Illicit wildlife trade

Laundering the proceeds of illegal wildlife trafficking, logging, and fishing remains a key risk in Kenya, particularly as a transhipment site for East Africa.

The UN meanwhile has linked corruption by individuals involved in law enforcement operations – the police, military, and customs – to the illicit wildlife trade according to the report.

Wildlife vulnerabilities

Countries that traffic wildlife products through Kenya include Tanzania (ivory), Mozambique (ivory and rhino horn), Democratic Republic of Congo (ivory), Uganda (ivory, pangolin scales, and timber), Zambia (ivory) and South Sudan (ivory).

Illegal wildlife products that originate in Kenya include elephant ivory, rhino horns, big cat skins and pangolin scales.

Kenya remains a key exit point for the ivory trade with Asia, including China and Hong Kong via Malaysia, Vietnam, Thailand and Singapore.

Timber and fishing

Illegal logging is another challenge. In particular, sandalwood, a highly profitable endangered species, is trafficked to Uganda and back to Kenya before being shipped overseas.

The illicit wood trade has been linked to cartels and corrupt public officials and it is estimated that Kenya loses US$90 million to illegal fishing every year

PEPs infiltrate trade and banks

South Sudanese PEPs responsible for the conflict in the world’s newest nation have infiltrated Kenyan banking, real estate, trade, defence, and corporate enterprises with their ill-gotten gains according to the report.

It concludes that Kenya is a destination country for illicit South Sudanese funds, which have been moved into Kenya using Kenyan corporate structures, luxury properties and banks.

The Sentry’s report Kenya Illicit Finance Risks and Assessment can be found here.


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