Anti-money laundering watchdog blames EACC for laxity in graft war

National Assembly Public Accounts Committee (PAC) chairman Nicholas Gumbo. PHOTO | JEFF ANGOTE
National Assembly Public Accounts Committee (PAC) chairman Nicholas Gumbo. PHOTO | JEFF ANGOTE 

The Financial Reporting Centre (FRC) has blamed the anti-graft agency and the Directorate of Criminal Investigations (DCI) for failing to secure prosecution or conviction of persons linked to financial crimes in more than 400 reports that the unit has so far generated.

Alex Nandi, the FRC’s chief executive officer, told the National Assembly Public Accounts Committee (PAC) that “he feels frustrated by the inaction of the Ethics and Anti-Corruption Commission (EACC) and the DCI in acting on our comprehensive reports”.

These reports are linked to alerts from banks of funds moving in accounts whose sources are suspected to come from corrupt dealings.

“We have so far sent nearly 400 reports to EACC and DCI and we have not seen any end result including convictions and assets recovery,” he told the Nicholas Gumbo led PAC. “I, just like you (MPs) is very frustrated seeing public money being embezzled and people not being convicted and their assets recovered.” The FRC, whose mandate is to assist in the identification of proceeds of crime, combating money laundering and the financing of terrorism, is under obligation to make information it collects available to the EACC and the DCI.

“Under section 24(b) of the Proceeds of Crime and Anti Money Laundering Act, the reports are disseminated mainly to the EACC, DCI, National Intelligence Service, Assets Recovery Authority and the Kenya Revenue Authority,” Mr Nandi said in brief to PAC.

The law, in section 24(a) stipulates that the core function of the FRC is to receive, analyse and interpret suspicious transaction reports and any other information related to money laundering, terrorism financing and associated predicate offences received from the reporting institutions.

“After analysis of the suspicious transactions and incorporation of additional information from other sources, the FRC prepares financial intelligence reports for dissemination to appropriate law enforcement agencies (EACC and DCI) and any other supervisory body for further action,” Mr Nandi said.

He said financial institutions and other reporting bodies are by law required to report all transactions above Sh1 million to FRC but many institutions are not reporting.

“It is very disappointing that people (institutions) only rush to report when a scandal has occurred and is reported in newspapers.

“We (FRC) can’t be surprised to see people rushing to report following the Sh5 billion scandal that has been reported in the Ministry of Health,” he said.

Mr Nandi appeared before PAC on Thursday alongside Mr Patrick Mugo, the head of analysis and John Koikai Karei, an analyst, to provide information on the procedure of reporting suspicious transactions by financial institutions, list of financial institutions that submitted suspicious transaction reports on monies related to the National Youth Service and action taken to investigate and recover the Sh791 million theft.