IMF, World Bank to help Kenya get out of dirty cash grey list


Cabinet Secretary, National Treasury & Economic Planning Njuguna Ndung'u. FILE PHOTO | DENNIS ONSONGO | NMG

The Bretton Woods institutions and Western allies have pledged to support Kenya in addressing deficiencies in dealing with money laundering and terrorism financing.

This is after Kenya was last week put on the 'grey list' by the Finance Action Task Force (FATF), the global anti-money laundering watchdog, for lacking safeguards against the flow of dirty cash.

The Treasury Cabinet Secretary Njuguna Ndung’u told the National Assembly’s Debt and Privatisation committee that bilateral and multilateral donors have committed to assist Kenya get out of the woods.

“This morning, I had a meeting of bilateral and multilateral lenders who have expressed support to ensure our country is taken out of the grey list. We have done the legal instruments that established four critical institutions that now need capacity building to effectively combat money laundering, terrorism financing and proliferation of weapons of mass destruction,” Prof Ndung’u said.

“The International Monetary Fund (IMF), the World Bank, the European Union (EU), the United Kingdom, and the United States promised us support to strengthen our institutions, including the Financial Reporting Centre (FRC).”

Kenya was placed on the list of shame along with 23 other countries, subjecting them to enhanced monitoring to ensure compliance with international anti-money laundering (AML), combating the financing of terrorism (CFT), and countering the proliferation of weapons of mass destruction (CPF).

The downgrade also means Kenya might be subjected to stricter due diligence when it is dealing with the rest of the world.

However, Prof Ndung’u told MPs that the placement would not impact Kenya's credit ratings.

“We have got a lot of support from multinational lenders. The greylisting will not worsen our credit ratings. The only thing we need to do is to strengthen our institutions,” Prof Ndung’u said.

The CS said Kenya had already made amendments to the law to strengthen its fight against dirty money and only needed to implement them.

Wajir East MP Mohamed Duale had demanded to know how the greylisting would affect the country's credit listing, concessional borrowing and foreign direct investments.

Prof Ndung’u dismissed the claims by a section of the media that Kenya was placed on the grey list due to its “wash wash” economy.

“I have read an article that indicates we are a ‘wash wash’ economy. That is irresponsible journalism. Our institutions are checking on this but we only need to strengthen their capacity,” he said.

“We are in a very precarious situation as a country. We have the situation in Somalia, South Sudan, Sudan and the Democratic Republic of Congo. People out there say Kenya is their safe haven. The enemy is one step ahead and we need to push the curve ahead and we have the strongest support from our partners.”

Prof Ndung’u said Kenya has not implemented all amendments to the anti-money laundering laws as approved by Parliament.

The FATF flagged Kenya, a financial hub in the region, as a regional hub for illicit gold as well as a transit for drug and wildlife traffickers, with law firms, casinos, and real estate agents being highlighted as some of the enablers of money laundering.

With Uganda removed from the list following recommendations of FATF's fifth plenary meeting, Kenya joined Tanzania and South Sudan in the grey list. Other African countries on the list include Nigeria, South Africa, Mali, Mozambique, Burkina Faso, Senegal and Cameroon.

In 2010, FATF placed Kenya on a list of high-risk countries for delays in enacting laws to tackle criminal financial activity as well as a failure to track money laundering. It was removed from the list four years later.

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