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Two enforcement agencies will be among the beneficiaries of dirty cash seized by the State, which means that forfeited monies will no longer be held in a KCB account by the Asset and Recovery Agency (ARA).
This is after a High Court judge in September directed the National Treasury to fast-track regulations to operationalise the Criminal Recovery Fund to administer proceeds of crime including cash and properties.
Treasury Cabinet Secretary Prof Njuguna Ndungú on October 6 published the regulations that will see the Asset Recovery Agency (ARA) receive five percent of the illicit funds, while the Financial Reporting Centre (FRC) will get three percent.
Another three percent will be used for the administration of the funds by ARA. The money from the funds will also be used to pay third parties including suspects who will have been exonerated of alleged wrongdoings.
The publication of the Proceeds of Crime and Anti-Money Laundering (Criminal Assets Recovery Fund) Regulations, 2023 comes after the High Court Judge Nixon Sifuna expressed fears that the millions of shillings that are preserved and later forfeited to the government every year, end up in KCB account at ARA and not the Consolidated Fund could end in wrong hands.
“The purpose of these Regulations is to provide a framework Purpose for the administrative operations of the Fund and the utilisation of regulations, properties and monies standing to the credit of the Fund as required under Section 113(1) of the Act,” reads part of the regulation.
After the conclusion of the case, these monies will be paid out to the Consolidated Fund, or the government’s bank account at the Central Bank of Kenya (CBK).
ARA, the administrator, shall open and operate bank accounts for the Fund with the approval of the board and the Treasury.
“The Administrator may, with the approval of the Cabinet Secretary, invest any surplus funds of the Fund in Government securities,” reads part of the regulation.
Justice Sifuna in September directed the chief executive officer of ARA to ensure that the money, which had been preserved at the KCB account since 2021, are transferred to the Treasury within seven days from the date of the judgment and file an affidavit confirming the funds move.
“In the intervening period between now and the time when the said Fund is operationalised, all monies that courts order to be forfeited to the government shall be paid into the National Treasury,” Prof Sifuna added.
The agency had preserved more than Sh15 billion in the last two years suspected to be proceeds of crime.
Part of the billions have been released after the agency withdrew the forfeiture applications and in some instances, successfully petitioned for the money to be forfeited to the government.
The money is reportedly held in a holding, for preservation purposes. The agency can only transfer the money that has been forfeited to the state, after the owner has exhausted the appeals, the source added.
Justice Sifuna, however, said there is a need to put in place safeguards and safety valves, to ensure such holes are plugged and the funds, assets and properties forfeited to the government are insulated and kept out of reach of further corruption, misappropriation or further money laundering by agents in government agencies.
