New rules will compel importers and exporters to conduct due diligence on all business people and companies importing and exporting through the Port of Mombasa, airports and other facilities of entry.
Freight shipping companies, their agents and brokers will be required to identify the individuals or companies sending or receiving cargo as way to end illicit trade, once a new law comes into effect before the end of the year.
Kenya has initiated a process of drafting a legislation which is expected to be presented to parliament for enactment to compel importers and exporters to conduct due diligence on all business people and companies importing and exporting through the Port of Mombasa, airports and other facilities of entry.
The law, aimed at curbing illegal transactions and bringing transparency in the global shipping industry, will also require banks and other financial institutions to identify who is sending money and who is receiving it and to assess the risk that the transaction might be used for illegal purposes.
Kenya will be the first country in Africa to pioneer the scheme dubbed 'Know Your Customer" (KYC) which requires customer due diligence by freight companies and keep precise details of their customers for a stipulated period of time.
The law will be ideal to Kenya considering it is East Africa's gateway for trade, particularly imports and exports which attract more agents of transitional crime due to the massive cargo it handles at the Kenyan ports and airports.
More than 19 Kenyan government agencies led by Ministry of Interior, the Treasury and the Judiciary have already endorsed the scheme which will be a mechanism to fight money laundering and shipments of fake drugs, narcotics, weapons and wildlife parts.
Currently freight shipping companies and their agents and brokers are not legally required to identify the individuals or companies sending or receiving any package moved worldwide. This has led to a thriving illegal trade.
Interior Cabinet Secretary Fred Matiang’i, Central Bank Governor Patrick Njoroge and Director of Public Prosecutions Noordin Haji led other agencies during the high level conference of senior government officials in Mombasa in endorsing the scheme meant to block illegal freight.
"The criminal activities we experience in our financial institution linked to illegal freight trade has damaged and endangered Kenyan's economy. In future, banks will have to adopt know your customer scheme before any transaction is completed but at the same time ensure there is very little barrier in doing business," said Dr. Njoroge.
"What we are pushing for is trade facilitators such as import-exporter agents, shippers and brokers be compelled by law to carry out due diligence of their customers or to keep appropriate records and this is what KYC will address."
Use of technology has also been blamed for advancing illegal trade through Kenyan borders and ports, as criminal now no longer need physical weapon to advance their operations.
To protect the 600km Kenyan coastline which extends from the Kenya-Tanzania border in the south to the Kenya-Somalia border in the north, Mr Matiang’i said 627 public and private landing sites and all private jetties will be vetted to control movement of illegal cargo along the coastline.
Data from the Anti-Counterfeit Agency, shows imported goods valued at about $90 million were seized by multi-agency team while more than 8,000 firearms and 300,000 rounds of ammunitions including grenades, mostly unregistered, were impounded in different border points of the country last year alone.
According to Financial Secrecy Index Value 2019, Kenya has been leading in tax loss in Africa, losing more than Sh40 billion through tax evasion, corruption and money laundering.
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