Money laundering war must continue

A Cabinet meeting chaired by President William Ruto on Tuesday this week approved the Anti-Money Laundering and Combating of Terrorism Financing Amendments Bill, 2023, which proposes to relax rules requiring customers to disclose details on source, use, and beneficiaries before withdrawing or depositing at least Sh1 million in cash.

Currently, the law requires commercial banks to report all transactions above Sh1 million to the Financial Reporting Centre (FRC) daily.

The Bill, which will now be tabled in parliament proposes to increase the reporting threshold by 50 percent.

Parliament must reject this Bill because it amounts to reverse driving. Corrupt elites just want to insulate themselves from the consequences of breaching anti-money laundering laws and regulations.

Does it surprise you that the political cream in this country always rallies together to oppose the introduction of any rules seeking to close loopholes for money laundering?

A few years ago, we saw MPs closing ranks to oppose the National Treasury’s effort to include advocates and law firms in the list of institutions which must report suspicious financial transactions to the FRC by invoking advocate-clients confidentiality.

Is keeping advocate-client confidentiality more important to society than the prevention of money laundering?

Under the current IMF programme being implemented by the government, we have agreed with lenders that all contractors and suppliers providing services to public institutions must disclose ultimate beneficial ownership of the companies.

This important performance benchmark is honoured more in breach than in practice.

Politicians in this country just love carrying cash. And society encourages it. When a flashy, flamboyant and rich politician docks at your church or funeral expenses fundraiser to donate millions of shillings and opulently display thick wads of banknotes, is it not just obvious that the money originated from proceeds of corruption?

Were the thick wads of banknotes donated to schools and churches sourced from genuinely acquired wealth, these supposedly benevolent elites would today be writing cheques to these churches.

When you have to pay out a large sum of money in this country today, there are many alternatives to cash. You can channel the payment through Real Time Gross Settlement Systems (RTGSS), which has the capability of transferring the money from your bank straight to the bank of the church or school you are supporting.

Even M-Pesa can do it. You just give your bank a list of beneficiaries and instruct it to credit their accounts. Indeed, Kenya has one of the most advanced mobile payment platforms in the world.

There is also PesaLink, a bank-based platform that facilitates payments between banks. And all banks have mobile banking platforms.

We must keep the threshold of reporting suspicious transactions at Sh1 million because the reporting of large withdrawals of cash is what will make it easier to track and trace the movement of proceeds of corruption and crime.

Today, large cash transactions have become the lubricant of corruption in this economy. We still remember the story of that hairdresser and star of the NYS scandal- one Josephine Kabura- who was found to have left a bank carrying hundreds of millions of banknotes in gunny bags.

Individuals were routinely stacking tens of millions in shillings of corruptly acquired cash in their houses.

We must strengthen FRC's capacity to report fish deals and enhance the powers of the Asset and Recovery Agency to trace, seize, and confiscate suspicious cash transactions. 

The writer is a former managing director of The East African.