The Central Bank of Kenya building in Nairobi. The Financial Reporting Centre has been formed within the auspices of CBK to look into reports of suspicious transactions in commercial banks that could imply money laundering. File
Commercial banks now have an institution where they will report any suspicious or unusual transactions – the newly established Financial Reporting Centre (FRC).
The new body will have the mandate to receive and analyse reports of suspicious transactions that may be associated with money laundering, and forwarding them to the police.
Chairman of the anti-money laundering advisory board John Wanyela said in a statement that the centre will be temporarily headed by Jackson Kitili, a director at the Central Bank.
“The FRC has been established pursuant to Section 21 of Crime and Anti-money laundering act 2009.
The minister of Finance and CBK have agreed to provide space and second staff to the FRC on an interim basis” said Mr Wanyela.
Initially banks were required to report any suspicious transactions detected by their internal controls to the Central Bank. The detections are pegged on the know your customer (KYC) policy guidelines.
The FRC was established last week under the Proceeds of Crimes and Anti-money Laundering Act. The Act 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.
“Plans to have a permanent director will start soon, I believe early in the next financial year after budgetary allocations so that it is aligned to what is happening in the country,” said Mr Wanyela.
Kenya has been viewed as highly prone to money laundering especially from pirates plying the Somalia waters.
The construction boom in the country has been linked to such inflows with the hike in land prices blamed on non-trade backed cash.
“By virtue of Kenya’s position in the region we feel that money laundering is a major issue as we have been an island of peace and economic prosperity,” said Mr Wanyela.
“We have had a vibrant construction system and some of this activities are beyond the normal activities of Kenya so there is need to determine that the inflows sources are genuine,” he added.
Ransom amount paid to pirates have grown over the years as they have become bolder with average ransom amount being US$5.4 million in 2010 with a total US$238 million paid in that year.
Kenya also hosts refugees in the excess of 500,000 from Somalia and South Sudan countries both with no financial structures, exposing it to inflow by persons posing as aliens.
Lack of a robust anti-money laundering legal framework has seen international money transfer players exercise more caution in their dealings with Kenya owing to fears of the country being used as a money laundering destination.
The United Nations has also warned of Kenya being used to finance terrorism, owing to its geographical vulnerability and lack of clear laws criminalising financial terrorism.
Banks are currently relying on CBK’s guidelines to counter financing of terrorism following exclusion of clauses dealing with the crime in the anti-money laundering act.
