Agency set to watch more bank clients in terror cash hunt

The Treasury has moved to boost the fight against terrorism financing by widening the scope of investigation to include most of the bank transactions.

Treasury secretary, Henry Rotich has empowered the Financial Reporting Centre (FRC) to not only investigate transactions considered unusual due to their size and frequency, but also those regarded normal but suspicious.

Finance Bill, 2015 seeks to amend section 24 of the Proceeds of Crime and Anti-Money Laundering Act to allow the FRC to “receive, analyse and interpret reports of usual or suspicious transactions.”

Currently the law allows for receipt of information concerning “unusual or suspicious transactions.”

The change gives the centre legal backing to interrogate accounts that may have fallen below its radar as they were operated “normally”.

“The Bill seeks to clarify the Financial Reporting Centre role in combating terrorism financing by among others, assisting in identification of persons engaged in terrorism financing,” said the chairman of the Parliamentary Finance Committee, Benjamin Lang’at.

Commercial banks are supposed to demand evidence (for example invoices) for any transaction exceeding $10,000 (Sh950,000). Details of cash transfers exceeding the cutoff figure are to be forwarded to the centre.

However, it is easy for a party to break down a transaction, thus passing it in amounts lower than the cut-off figure to avoid attention.

The minister has also expanded the objectives of the FRC to include identifying financing of terrorism. Currently the centre is limited to investigating proceeds from crime and combating money laundering.

The Prevention of Terrorism Act signed into law in 2012 allowed for passage of information regarding suspected terrorism financing to the FRC.

However the Proceeds of Crime and Anti-Money Laundering Act which defined the centre’s objectives did not give it powers to investigate terrorism financing creating a loophole.

Kenya has been a victim of several Al-Shabaab terrorists’ attacks which have dented its economic prospects especially in the tourism sector.

In 2011, the government sent troops to Somalia to, among others, disrupt the militants’ economic activities which included piracy and sale of charcoal.

A UN monitoring group had in 2011 estimated that Al-Shabaab generated between $70 million to $100 million per year in revenue from taxation and extortion in areas under its control, notably the export of charcoal and cross-border sale of contraband. Kenya Defence Forces have since taken control of most of the border area.

READ: Al-Shabaab exporting charcoal from KDF controlled port, UN says

Early this year the government froze the accounts of 13 Somali remittance firms and issued a list of 85 entities suspected to have links with the terrorist group.

There have however been concerns about the operational capabilities of FRC following expiry of the tenure of some of its board members including its chairman and deputy.

Treasury had indicated that the government was putting priority in passing amendments to strengthen the centre before making appointments.
The centre is still headed by a director seconded from the Central Bank of Kenya, Jackson Kitili.

The law provides that the financial reporting centre will be headed by a director approved by Parliament for a four-year term renewable only once, with the deputy director having a three-year term.